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Home My WebLink AboutAPA3103':J... ' ... -... ~ . l.. . . !, . ·- ALASKA STAll: DOC: g HISTORICAL AND PROJECTED OIL AND GAS CONSUMPTION JANUA.RY 1985 ,. . ., ... ' .. :.. ._. )Aias_k~ .. R~P.artment of· :·~ • • ·• • •• • • :. .:.. ---• : :!l:oo ..... ~. ·-.~: • . •. . : ~ ..; . . . ...... ~,·-~.-;-N. ·:-.. ·:AI--· ·-·-· u· -RA·_. t -· -->~--~ ' .. ,. . . ,; . y.,:~.. . . .. , . . .. RESt> tlRCEs ~-} . ?-,._ =. • • . -.. • -,:,..-: • _.-_' :: .. • ·.:·· . ' • • --DIVISION· OE ~-;O.IL &,: GAS -~ ~!.~;i:~~{;;:~~j?:::9i~;~~-'. nz &. -~ • ... -. ·.:: ~ -··_. ·'.: --::-:··. -:>.:·:: ~.-~-... ·' . ':-~;~~~~--... .20 •. ·..., .•. -,.·.,---;.-J' .• ~.--.;t'.· .• ··'>··-.··:J &: ..... ~-.,.;. . '"'~··· -. . ~""'-· Cover Photo: Trans-Alaska Pipeline Syste"" crosslns the Gulkana RJvet.. Mile 14 7 Richardson Hlpay,• photo by Wayne Hanson. · STATE OF ALASKA HISTORICAL AND PROJECTED OIL AND GAS CONSUMPTION Bill Sheffield Governor Esther C. Wunnlcke Commissioner Department of Natural Resources January 1985 · Prepared for the First Session Fourteenth Alaska Legislature TABLE OF OONTENTS Executive Summary/Introduction 1.0 Royalty Oil Program 2.0 Reserve Estimates and Royalty Share 2.1 Cook Inlet 2.2 North Slope 2.3 Undiscovered Resources 3.0 Consumption Forecast 3.1 Transportation Liquid FUels 3.2 Space Heating 3.3 Utility Electricity Generation 3.4 Industrial Fuel Use 4.0 Analysis of Surplus 4.1 Liquid Petroleum 4.2 Natural Gas 4.3 Projections Beyond Current Inventory 4.4 Sensitivity of Results 5.0 Historical Oil and Gas Consumption 5.1 Gas Prodnction and Consumption Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F Appendix G Royalty Oil and Gas Data by Field Demand Projection Methodology Processing Plant, Transportation Facility and TAPS Data Economic Growth Assumptions Conversion Factors Crude Oil Assays Definitions of Statutory Terms -i- 1 3 9 9 9 10 14 14 15 15 15 21 21 21 21 22 25 25 32 50 58 59 61 62 63 List of Tables and Figures Page Table 1.1 Estimated Production for Prudhoe Bay and Kuparuk River thits 5 Table 1.2 Bids Received at Competitive Royalty Oil Sale 6 Table 1.3 COmpetitive Boyalty oil Sale 8 Table 2.1 Estimated Recoverable Reserves and Royalty Share 11 Figure 2.1 Predicted NOrth Slope Production 12 Table 2.2 Estimated Availability of North Slope Oil 13 Table 3.1 Projected Demand for Oi 1 and Gas 16 Table 3.2 Vehicle Transportation Fuels Demand 17 Table 3.3 Space Heat ll\lels Demand 18 Table 3.4 Utility Generation Demand 18 Table 3.5 Industrial ll\lels Demand 19 Table 4.1 Sensitivity Analysis of Net Surplus 23 Figure 5.1 Oil Production, 1977 -1984 26 Figure 5.2 Oil Consumption, 1977 -1984 26 Figure 5.3 Gas Production, 1971 -1984 27 Figure 5.4 Gas Consumption, 1971 -1984 27 Table 5.1 Historical Oil Production: State 28 Table 5.2 Fuel Categories, Dept. of Revenue 28 Table 5.3 Historical Gas Disposition and Sale 29 -ii- EXECUTIVE SUMMARY This ·document provides d.ata on the in-state supply of and demand for hydro- carbons. It is the intent of this report to address· AS 38.05.183(d) which states: tt(d) Oil or gas taken in kind by the state as its r~yalty share may not be solc;i or otherwise disposed of for export from the state until the c-issioner detepnines that· the royalty-in-kind oil or gas is surplus to the present and projected intrastate domestic and industrial needs. 'lbe commbsioner sb'll make public, in writing, the specific findings and rea- sons on which his de.termination is based ancd shall, within 10 days of tho conveniq of a.regu1ar session of the leg1slature, submit a report showing the immediate and long-range domestic and industrial needs of the state fdr oil and gas and an analysis of bow these needs are to be ml!t.11 This report contains more than a supply anc;i demand forecast. <llapter I is an explanation of the Sitate's royalty oil program and the public considerations that guide its implemen\:ation. Chapter I :also includes a summary of the Com- petitive Royalty Oil $ale held December llt 1984 in which 90,000 barrels of oi 1 were sold. Chapter II provides estimates of rema1n1ng known hydrocarbon re-erves and resources as well as the state '.s royalty share on state lands. These data are u.sed to project hydrocarbon production over the forecast period (1985-.1999) and beyond. Reserve estimates ~re developed for low, mid and high cases. The low and mid cas.es are based upon proven and probable reserves as well as rela- tively stab'le real oil prices. The hj.gh estimates are more geologically prob- abilistic and assume increasing real oil prices. The low and mid range esti- mates would seem a more prudent basis for long raqe policy considerations. The most recent mid-range estimate of remaining oil reserves is 9.14 billion barrels, of which approXimately 9 billion are on t.he lbrth Slope. The state's royalty share is estimated to be 1.15 billion barrels. Remaining gas reserves are es~imated at about .39.4 trillion cubic feet ( Tcf), of which the royalty share is 4.7 Tcf. Approximately 36 Tcf are lo~ated Oll the North Slope. l'he Division of Oil and Gas estimates that North Slope production will peak in 1987 at almost 1.8 million barrels a day. Production will then decline, reaching about 1 million barrels a clay in 1994 and 600,000 barrelS &c 4ay by tbe en,d of Ute centti.ry. Cook :Inlet production volumes will be relatively insignificant .throughout th.e period. Forecasts of oil and gas consumption (1985-99) are developed in Chapter III for the Bailbelt and the remainder of the state by major use category. Chapter IV deri.ves estimates of the pt;'ojected surpl:us. · Cumulative state con- sumption of oil is estimated at almost 621 million barrels ove.r the forecast period. Natural gas demand is projected to be 3.6 Tcf. Chapter V presents historical production and consumption data for the 1977-84 time period. Growth rates for various end use consumption categories are also calculated. These growth rates are considerably higher than t.hose forecasted in Chapter III. This difference can latgely be explained by the reductions in ~eal state spending over the forecast period. The supply and demand projections use4 in this report are uncertain by nature and should be viewed as likely outcomes; they are applicable only if the underlying assumptions presented here are approximated by future events. For example, in-state consumption will be influenced by economic and population growth wh~ch will in turn. be fueled by world energy and natural resource pr.ices. Development of the Susitna hydroelectric project would dramatically affect the in-state demand for natural gas, particularly after the late 1990s. The potential growth of a natura! gas export market would affect in-state natural gas ava:i.lability ·as well as prices. The suppiy side of the in-state balancing equation also is probabilistic. The mid-range estimates of oil and gas resources (9.14 billion barrels, 39.4 Tcf). are ~;easonably .certain though transportation of natural gas from the North Slope remains.uncertain. Estimates of undiscovered resources (the high range estimates) must be . treated as highly speculative and of minimal· value for planning or Fojection purposes. Even if these un4iscovered resources exist (which they may not), there is no guarantee that they will be discover~d or deveiope4 in an appropriate time-frame (if ever) to assure long-run continuous hydrocarbon supplies. Fiscal resources devoted to the hydrocarbon discovery and development process by the major oil firms will be largely determined by world market conditions, not by surplus or deficit conditions in Alaska's rel- atively small intrastate market. In summary, under reasonable assumptions about in-state reserves. and consump- tion, the current inventory of hydrocarbon J;eserves is more than. adequate to meet the estimated demands of Alaska~s ·for the next 15 years. Additionally, significant quantities of hydrocarbons are surplus to present projected in-state domestic and industrial needs, and are therefore presently available for export from the state.l · lsee Appendix G for discussion of statutory definitions. -2- I. ROYALTY OIL PROGRAM When a landowner sells the right to explore and develop oil and gas, it usually reserves to itself a percentage of the oil and gas ultimately produced if the exploration is successful. That percentage is known as a royalty interest or royalty share. 'nae State of Alaska holds a royalty interest in the lands it has leased for oil and gas exploration and development 1 and is currently receiving royaltr payments from oil and gas production in Cook Inlet and from oil production from the North Slope Prudhoe Bay and Kuparuk River Units. Under Alaska Statutes and state oil and gas leases, the state can take its royalty share of oi 1 and gas either "in-kind11 or "in-value. 11 When the state takes its share of production in-kind, the Commissioner of Natural Resources, acting on behalf of the state, disposes of the oil and/or gas through negoti- ated contracts or competitive sales. When royalty shares are taken in-value, or in-money, individual lessees market the state's share of production and reimburse the state accordingly. In 1984, the state continued to take its share of Cook Inlet gas in-value and continued to sell its in-kind share of Cook Inlet royalty oil to Tesoro Alaska Petroleum Company under-the terms of a negotiated contract. The Tesoro Cook Inlet contract has been cancelled effective October l, 1985, and the state will take this oil "in-value" on that date. North Slope royalty oil was taken both in-value and in-kind. lbree in-state refiners, Chevron U.S.A. Inc., Tesoro Alaska Petroleum Company, and MAPCO Petroleum Inc., hold long-term negotiated contracts with the state for the purchase of Prudhoe Bay royalty oil taken in-kind. Table 1.1 on page 5 depicts estimated total North Slope production to 2010 and current North Slope royalty oil sales. The Department of Natural Resources is proposing a long-term negotiated contract with Golden Valley Electric Association (GVEA), the public cooperative electric utility in Fairbanks, for approximately 5,000 barrels per day of Prudhoe Bay royalty oil. The Department anticipates signing the contract in early February 1985. A hearing before the Alaska Royalty Oil and Gas 'Development Advisory Board on the contract is scheduled for February 20, 1985. As required by AS 38.05.055, the administration plans to introduce legislation approving the long-term GVEA. contract. The legis- lation will be submitted not later than March 15, 1985. As discussed at legislative bearings in 1984, the Department analyzed the possibility of selling some of the remaining in-value royalty oil by competi- tive bid. On July 12, 1984, the Director of the Division of Oil and Gas, acting on the Commissioner's behalf by departmental delegation of authority, found that there was a surplus of royalty oil available for competitive sale and export from the state and gave notice of the state's ·intent to sell by competitive bid additional royalty oil from the Prudhoe Bay and Koparult River Units. At the same time, the director solicited proposals for backup contracts which would be activated if the state failed to sell the entire volume of royalty oil at the competitive sale, or if a competitive purchaser failed to take delivery. -3- Seven companies submitted bids for the state's proposed backup contracts: Texaco Inc., U.S. Oil & Refining eo., Chevron U.S .A. Inc., Union Oil Company of California, MAPOO Petroleum Inc., Shell Oil Company, and Sohio Alaska Petro'teum Company. On August 22, 1984, the director determined that the contingent disposal of the royalty oil in backup contracts to the companies offering the highest premiums was in the best interest of the state. Backup contracts were awarded to Texaco Inc. (for approximately 50,000 bpd of Prudhoe Bay Unit royalty oil at a $0.38 premium per barrel and approximately 15,000 bpd of Kuparuk River Unit royalty oil at a $0.07 premium per barrel), U .• s. Oil & Refining . Co. (approximately 5,000 bpd of Prudhoe Bay Unit royalty oil at a $0 •. 15 premium· per barrel), and Cllevron U.S.A. Inc. (approximately 20,000 bpd of Prudhoe Bay Unit· royalty oil at a $0.10 premium per barrel). Should the need a~ise, the state would act·ivate a backup royalty contract with Texaco Inc. for up to the first 50,000 bpd of Prudhoe Bay royalty oil and approximately 67 percent of available Kuparuk River Unit royalty oil. Prudhoe Bay royalty volumes in excess of that amount would go next to U.s. Oil & Refining Co. and finally to Chevron u.s .A. Inc. On October 10, 1984, the director issued a. Final Notice and Invitation to Bid on six"'fDDnth and one..,.ear contracts for approximately 90,000 barrels a day of royalty oil from t~e Prudhoe Bay and Kuparuk River Units to be offered at a competitive sale on December 11, 1984. FOurteen bidders qualified to partic- ip;tte in the competitive sale, and fouy qualified as 11pTiority" bidders.. Priority bidders were those which sold an average of at least 5,000 bpd of refined petroleum products to distributors or consumers within the state between June 1, 1983 and May 31, 1984, and which demonstrated the ability to process crude oil into refined petroleum products at a processing facility owned by th~ bidder. 'Ibis priority status gave the in-state refiner or sup- plier the right of f~rst refusal to meet the highest winning bid in each category for lots remaining after tentative awards were made to the highest bidders and the apparent high priority bidders in each category. The sale was held at 10 a.m., December 11, 1984 at the Anchorage Westward Hilton. The oil was offered in three categories: Category A was for 66.6667 pe1:cent of the royalty oil from the Kuparuk River Unit in three lots Of approximately 5,000 barrels per day each; Category B was for 26.6667 percent of the royalty oil from the Prudhoe Bay Unit in 10 lots of approximately 5,000 barrels per day each; Category C was for 13.3333 percent of the royalty oil from the Prudhoe Bay unit in five lots of approximately 5,000 barrels per day each. Categories A and C were for a six-month term and Category B was for a one-year term. Forty-nine bids were submitted for the 18 lots available. Of the eight qual- ified companies that submitted bids at the sale, five were successful: u.s. Oil & Refining eo., Chevron U.S.A. Inc., Texaco Inc., Union Oil Company of California, and Sohio Alaska Petroleum Company. The highest winning bids in each category were: a premium of $1.04 a barrel for category B Prudhoe Bay oil from u.s. Oil & Refining Co.; a premium of $1.03 a bar.rel for Category C Prudhoe Bay oil from Chevron u.s.A. Inc.; and a premium of $.82 a barrel for Category A Kuparuk oil from Cllevron U.S.A. Inc. First delivery of the oil sold at the competitive sale is April 1, 1985. Tables 2.2 and 2.3 following th.is narrative summarize the sale results. -4- JAN. 14. t915 STA'!i IF IUI!ItA IIEMimi9IT IF 11111\IRII. II£SIIIII:ES Table 1.1 DIVIBIIIf IF OIL AND SAS ESTIIIIIIED JIIIIICTIIIf Fill PIID«£ BAY lriD IIIJIAIU\ RIID 11111& ESTIIIIITED 11J1JIL lllllllii:JIIIf ESTIIIIIIED IIDWUY EBtllllllED &lLE!IIF IIMLlY OIL (~l':lllll'f) CIIIIRREI.S 1':8. IIAYI Ca!RIIEL& IIERIIAYI til ce1 (31 (41 (5) '" m TOTAL WIAL TOTIL PllliiiiE IQIIARII( TllfAL lllllCO 11'8 IM'A 1BiUIIl TE!lR1 Df.VIIIlll aJIIETITM IIMI..TY YEAR PRIIHE K1FMIII IIIYALTY IID'tALlY IIIM'l.TY lll.DI IPiliJIOSEI» CII.DI CIE»I liiU lll'VIl.i£ __..... 19M 1,511,1111i 128,ele l,fil!lwllel 187,518 115.1111 ... 35,111 15.1111 3'!1,765 1a.a IM,735 l'lll5 1,11111.81&1 188,8 1,6111,111 181,511 22.,511 2tt.QIII 35,181 s.• 415.9!19 ... 1 II, .. ... IS. Ill 1986 1,51!8,11111 llll,llill 11fiiii.B 181,8 22,5118 21t.8 35.• IS. IIi 45,99!1 26.111 I&.• .... 1987 1,~15,881 111811!1N 1,655,111 184,J'15 22,:. 1.!16.815 J5,eetl 4,917 45,231 25,11G7 11,711 711ttlll ltl88 1,~-21111,M8 11S!:i1M 165,1i211 25,lllili 198,1i211 35,. 4,417 .e.w 22.,967 15,9111 71,781 1989 1,115,881 2M. liN '·3715.· 146,815 25,111 171,815 35,11!11 J.9l7 ~au 21.3&7 ...... lit& 1998 1,151,811 211,118 ··--131,251 es.• 156.1!58 JS,1111 3,51111 32,211 18,281 &e. till S4.1SI 1991 958.8M eee,eN l,t:iftiN 11&.151 1!5,1111 143.758 35,8 :s,tlil 29,133 1&,4&7 "·· 411.583 19!12 851.11111 ••• 11 a:&. IIIII 116,211 25,tll 131,251 35,tll 2,833 2£.16& "·'~ .... ~<\17 1993 '158,1181 ••• a.• 93,758 25,8 1111;158 35,111 e.• 2l,IMI 13,11111 !,HI :16.2511 ~~ 658,11111 171,1111 a,aee 81,251 et,2il lli!,Sil JS,elll 2t167 19,933 11,151 7,1111 26,311 1995 575,eet 145,11H 121.1111 71,8'15 18,125 ... J5,11i1 ss.• I 199& 518,0el i21l,BI8 631,8 63,7SI IS,Iill 711,751 351NI 43,751 Vl 1997 468,11101 181.01!1 51,1111 57,511 12,51!8 78,8111 35,1111 15.111.1 I 1996 421l,e. 88,11111 --52..511 ...... 62.511 35,111 27,5111 1999 3118,881 lS,IilN 455,MI 41,se& 9,315 !16,875 3S,IM 21,8'15 2008 :na,eae 65,111118 ••• 42,581 &.125 5\61.!:1· 35.8111 IS.6C:i 21)81 ••• 55, liN 355,M 31,se& 6,815 44,J'15 JS,IM 9,315 200Z 278,Nil se,llli 328,& 33,7511 6,251 ~.-35, .. I,NI 21'l03 248,111111 o\8,011 ... lll,eN 5,111 JS.eet JS.M • 2004 21a.eoe :as, a 245,a 26,258 ~.37S .. 61.!:1 31,1i211 2ell5 IBe,eH 25,8 2851 INI 22,518 3,125 1!5,625 25.1i211 20116 lEI!, Nil 25,1181 1115,8 21,Nil 3,125 23,125 2J.l25 ., 14l,lill ce.• 168,8 17,5111 2,5111 21,8111 21.111 2888 ue.eea 21,8 131.888 ll. 158 2.581 1&.251 1&.251 2Be9 ..... Jll,lll» .... 11,11111 1,251 11,251 u,a 2818 :il,flll se,a 61,111 &.251 1,251 7,. 7,511 fiOlES1 (1) IIIR ESIIIIIIlE IF FIEUI l':llfiiiiiRIEt IX:TtEER 1984. m IIIST IF HI \Q.liE tAIIllf as.• JIID1 1 111101 18 DIIREM1l.Y IIEIIIB TIIIDI "IN Vll.l£, • IllS 11U aJIIETitliiEI.Y Fill IELIIEIW IFilL 11 19115 1\UIJ SEPT. ll. (2) IWEll" S lliiiiBIT atmiACT EXPIRES JliE 311 19a. 19115. Ill IE1IIlEll 11 1985 IT lllllllt:IPAlED IIIIT 1E!DIJ llllL IDIIEIG DEI.IIDIES IHEI ITS 1219/11 P111HE I:DtfRACT, !MIDI IllS A lllllii.M 13) MA1S PI1JIIIiBI TEN-~R IDI'11IIItT IIILD aJIIBIE Fll.l IDIIltiiFIER IUIMIITY IF 13.8&1. IF IIAILY P111HE IDYILTY OIL 1111 EIPIID JilL 11 1995. APPROIIIL BY liE I.BilllATUIIE AND IIMIIIIIIL IIIICTilY IS 2.i67S IF DRILY PRl.DIE lliiYII.TY OIL. 16) D£VIlllf'S I:DtfRACT I:II.1.S filii A IIIJIIIIII.IRITITY IF !.U IF DIIILY PIIIHE IIJfll. TY OIL. Tl£ CDRI1IEI' EIPJID JIIIIIRY 11 1995. 141 1ESDJII1S CUIHlENT COOIIII:T DUS FllliiiiAIIII.M II.RrrllY IF 24.5D IF DAILY PllllliiE IIYALTY OIL WS am III.ET IIMI.TY PIIIIIE'flllt. l7t lll.IVERJEB MILl aJBI: APRIL 11 19115 FOR 51,. IIPD IF PIIDIE MY liE f.UllfTITY IS 21.21BJ IIi 19841 lltliiiiU. BE 21.31!6J SJMI'IIIB IIIIT lliiYII.TY OIL IIIII 1511M J11D IF IQAIIUl Rl\0 IIIIT IIJYILTY OIL, Jill. 11 1985. lHIS aJI11I.IICT UIU. liE IN:IEASED 111 Ill' lllllllll 1111 IIJU. I:IMDI£ FOR IIE--81 liND 811-llllffll PEUIJI!I. IIE!JlECti\IELY1 lliiWTJlY llf OCIDBER 11 1985 DIE TO Dl!UWITJIIi IF Tl£ aiM III.ET AS II IIESII.T IF liE IIEJ:. 11 1 1984 IDIIEI'ITM SilL Plllllllll IIIIT llltTRIV:T Ill TltiT lllllE. liE DIITMCI' EJPIRES JIIUIIY 19!L'I. TilE lHIS OIL IIJRI!Iii "1M Will. • BIDS RECEIVED AT OOMPETITIVE ROYALTY OIL SALE DECEMBER 11, 1984 Category A 3 Lots Premium Bid • $0.82 • $0.53 • $0.17 $0.17 $0.14 $0.08 $0.08 $0.08 Category B 10 Lots Premium Bid • $1.04 • $1.04 • $1.03 * $1.03 • $1.03 * $0.64 * $0.64 * $0.64 * $0.64 * $0.64 $0.64 $0.64 $0.58 $0.51 $0.51 $0.46 $0.46 $0.46 $0.46 $0.46 $0.43 $0.39 $0.38 $0.28 $0.22 $0.20 $0.13 * denotes winning bids Table 1.2 Kuparuk Oil 6-montb term Company Chevron U.S.A. Inc • Union Oil Company of California Chevron U.S.A. Inc. Chevron U.S.A. Inc. u.s. Oil & Refining Company Texaco Inc. Texaco Inc. Texaco Inc. Prudhoe Bay Oil 1-year term -6- Company U.S. Oi 1 & Refining Company U.S. Oil & Refining Company Chevron U.S.A. Inc. Chevron U.S.A. Inc • Chevron U.S.A. Inc. Texaco Inc. Texaco Inc. Texaco Inc. Texaco Inc. Texaco Inc. Texaco Inc. Texaco Inc. She 11 Oi 1 Company Texaco Inc. Texaco Inc. Sobio Alaska Petroleum Company Sobio Alaska Petroleum Company Sobio Alaska Petroleum Company Sobio Alaska Petroleum Company Sobio Alaska Petroleum Company Shell Oil Company Texaco Inc. Chevron U.S.A. Inc. Chevron U.S.A. Inc. Golden West Refining Company Tesoro Alaska Petroleum Company Union Oil Company of California Category C 5 Lots Premium Bid * $1.03 * $0.64 * $0.64 * $0.64 $0.51 $0.51 * $0.51 $0.51 $0.51 $0.39 $0.37 $0.28 $0.26 $0.13 * denotes winning bids Prudhoe Bay Oil 6-month term -7- Q:lmpany Chevron U.S.A. Inc. Texaco Inc. Texaco Inc. Texaco Inc. Texaco Inc. Texaco Inc. Sohio Alaska Petroleum Company Sohio Alaska Petroleum Company Sohio Alaska Petroleum Company u.s. Oil & Refining Company Golden West Refining Company Chevron u.s .A. Inc. Tesoro Alaska Petroleum Company Union Oil Company of California STATE (f llJIIIA COHT'IT1~ IIIMLTY OIL SIU Table 1.3 I'EC. U, 1W ESTIIIITED COOfliiG TIJTII. EST. TOTIL DIF.EIIBG ..u I.SiiTH llAIIIEl.S 81& rH.lZED IBI..IZED lltiiHISER Ulfl PEUAY liN DAV!II . PER !XINriW:T PIICE PIIB!llll (11 Ill (2J I:A'IEDV AI ICIJIAU OEIID I 1 s.• 1112.5 912.581 Slfi,CJ! SLI2 ·~&. 187, 758.. 188t,177.13 ~lilt I a s,a 182.5 912,511 116.92 ti.Sl $15, IJ23, 125 ... t539, 552.13 D£VIOI I 3 s.• 1112.5 912.511 tUi. CJ! tl.17 tiS, SJ4. 625.. t211,152. 13 !UI'DTII. 15, .. a. 737,581 t47,715,58LII 11, :s:54, 781.38 HIIHST PIDllll BID: te.l2 AIIEliME PREIUI.II BID: $8.51 CATEBORY 81 PliUIItiE U.S. OlL 1 5, .. 365 1,e.a 117.92 11.84 134,-.•• 11,713, 655. 7S U.S. OIL 2 5,8 365 t,aas,a 117.92 lt.M 134,612,8.11 11,783, li5S. 7S CllVD I 3 s.en 365 1.825,111 S17. 92 11.13 134,583,758.. 11, 68t 4«5. 7S O£VD I • 5,111 365 1,125,1111 117.92 11.83 134,SUt7Se •• Sl,li&S,& 7S CI£VD I 5 S,M 365 1,1125.111 117.92 11.13 134,513,758.. t1,68t-.,7S T£JIICD I 6 s,a 365 1,aas,a t17.9a ··~ 133,872,811 •• tm,655.7S. 1EIAtO I 7 s ••• 365 1,825,111 .117. 92 $1,64 f33,872, ... ~655.75 TEXlDI • 8 5,8 365 1,825,. 117.92 te.64 133,&72, ... tm.655.7S 1EIAtO f 9 S,Mt· 365 .1.825.1111 117.92 te.64 133,872,-· ~65S.TS lEXG f 18 s,a 365 1,825,8111 117.92 te.64 133,872,111.18 tm,655.7S SIJBTDTII. sa, a !8,258,188 S342, 315,251. Ill $13,331,817.58 HiGHEST· PREMIUM BID: Sl.f\ IWERASE ~~EJIIIIJIII BID; 11.84 CA1'Eil!RV Ct PRtJDI«:£ O£VD f 1 s.eeo 182.5 912,51111 117.92 11.13 117,291, 875.. 1842,782.86 i'EJJtQ I 2 s,eee 182.5 912.,581 117.92 11.64 116,936,8 •• 1486.827.88 TEJAaJ • 3 S,IH 182.5 912.518 117.92 18.64 116,936.-· Mai,B27.88 TElliCO • It 5,8 182.5 912.,5111 117.92 Sl.64 116,9:J&.IIt.lll 1486.827.88 SIJIIO 5 5,181 1112.5 912,518 117.92 11.51 116,cU7,37S.III 1368, 282, 88 SUB'!'DTII. 25,8 4, S62., :iiN 184,917.258.08 12.671.389.38 HIIHST PIEIIIIII BIDt 11.13 AIJEIIA&E il!IEJIIIU" BID: 11.69 TOTALS .FOR Ill. LOTS: 18 98,8 25,558,eel 1474,'338,i!tl.ll 117. 557. 'f7B. 25 !11 THESE PRDJEtTIONS ASStiE i1I.Ai CUAIIENT !IAIIMET CIIIDiiill6 AI4D PRICES CONTINE. 121 THIS llllliNT IS THE DIFFEREta .J£niEN THE ESTIMiED RDVALTVwlN·Wll.E EEIPTS BASED 1111 THE IJOLWE I!El&HTED AVERA6E !F PRODUCERS' REPDRiED NETBAtK PRICES IOCTOBERI AND ll'.£ ESTIMATED RECEIPTS tF 11£ COIIIETITlVE SALE BASED OM TIE 8Iil Plqe]IIIJIII lll.l.S Ti£ BASE PRICE, ttl PRIORITY BIDDERS ._s;z_ !.:t. RESERVE ESTIMATES AND ROYALTY SHARE This chapt!!r discl.lsses ~stimates of 9il and gas reserves in t)le state and the state's royalty share of t'hese reserves. i'be reserve estimates have been developed for low, mid and high ca~t.es. 'rbe low and mid cases are based upon prCiven and probable reserves. The high cases in some categories .also include estimates of undiscovered reserves. Terms qf individual oil and. gas lease contracts were used to calculate the state's royalty share of the re.spective reserves. 'l'he low estimates assume stable to falling oil and gas prices and less than satisfactory reservoir performance. The high estimates assume d.sing oil and gas prices and better f=,han expected reservoir performance.· The mid case estimates assume stable oil and gas prices and average re~e;voir per- formance. The estimated re'serves and royalty share for oil and gas are shown in Tabie 2.1. 'ftle estimates have been developed separately for Cook Inlet, the Nortq Slope SIJ.d the ''undiscovered'' category, at;J d~f:ferent s~rces of in~orma~i~~ wete drawn upon for each category. · Cook Inlet Much historicai and subsurface information is available abo.ut the oil artd gas reserves in the Cook lnlet area, and major new. dil;lcoveries c.re not conside't'ed likely at this time. i'be reserves are assumed to remain constant for low, mid and high estimates. Cook Inlet reserves account for about lo5% of the low and .8% of the mid estimates of total proven and probable oil and gas reserves, respectively. lhe high estimate of reserves further reduce~)~ the Cook Inlet share of total oil and gas. reserves to 0.6%. North Slope Oil and. gas reserve estimates shown in Table 2~1 are for currently leased state lands. Current North. Slope Cli.l production is fro~ the Sadlerot:ni¢ reservoir irt the Prudhoe Bay Unit and the Knpa:tuk ltiver reservoir in t;be Kuparuk River Unit. Table 2.2 lists production forecasts for some of the .fields listed in +able 2.1:. :figJ:.lre 2.1 graphically portrays these esti-.tes. As illusttated, North Slope production is expect!!d to increase slightly between 1984 and 1987, then begin to decline starting in 1988. Currently, no ga$ is e'xported fJ;o!ll the North Sl~pe. The Alask~ Na,tura,l Gas Transportation System for :carrying gas to the. LOwer 48 is ta1;geted for comple- tion in the lat~ 1980 1 ~ at the earliest, but it is unaertain when of c:onstl;'uc- tion of the line will comme~c¢. The propo,sed pipeline capacity will permit exports in tbe range .of 2.0 to 2.4 Bcf per day, with an eX~eCI;.ed level of z.-o Be£ per d~y~ 41-ternative marketing of North Slope natural gas is being con ... si4er~d, b'Qt tl:lese pr9spects are also very uncertain at this time. Undiscovered Resources Undiscovered oii and gas resources are computed as the simple average of the low estimates recently developed by the u.s. Geological Survey (USGS) and the National Petroleum Council (NPC) for lands in Alaska. The USGS estimates the quantities of conventionally producible reserves based upon information available to USGS. At the 95% confidence level, the low USGS estimates of undiscovered oil and gas resources are 2.5 billion barrels (Bbbl) and 19.8 Tcf respectively. In the NPC resources estimates, yields on investment of greater than 10% for oil and gas and 15% for oil alone were required before a field was considered "commercial." The NPC estimates that 17 .a Bbl of undiscovered oil and 10.1 Tcf of undiscovered gas could be produced commercially. The averaged low estimate of undiscovered resources is added to the high estimate in this report in order to take a conservative approach on resource esti- mating, but the estimate should still be treated as a highly speculative number. Many of the oil and gas resources identified by the USGS and the NPC are likely to be found on federal and private lands. ESTIKilTED RECIWERABLE RESERVES MD ROYALTY SKARE Table 2.1 RECOVERABlE RESERVES ROYALTY SHARE ••••••••••••••••••••••o••••••••••••••••••• •••••••••••••tclatttttttttltt••••••••••••••• OIL lllflbb11 &AS tBcfJ OIL (Bftbbll &AS (JcfJ •••••••o••••••••••• .••....•.••...•.•.... ·~··················· ••••....•............ LOI IUD HIGH LOU RID HI&H LOti RID HI&H LOI RID HI&H COOK lfi.ET Ul 231 Beaver Crl!tk I 231 231 Beluea River na 778 778 59 " 59 Birt Hill 11 11 ll -Falls Creek 13 13 13 &n.nite Point Z7 27 27 26 26 26 3. 3 3 3 3 3 han liver 26 26 26 Kenli 845 845 845 17 17 17 Le•is River .22 22 22 3 3 3 lk:Artllur River 74 74 74 86 86 86 9 9 9 11 11 u Riddle &round Shoal 15 15 15 ll II 11 2 2 2 1 1 1 Nicolai Crek 3 3 3 North Coak Inlet 859 859 859 107 107 107 North Fork 12 12 12 -Sterling 23 23 23 0 0 0 S.1nson River 22 22 22 259 259 259 Trading Bay 3 3 3 33 33 33 0 0 0 4 • • !lest Foreland 20 20 20 3 3 3 lint Fort 6 6 6 SUBTOTAL 142 142 142 3,264 3,264 3,264 15 15 l:S 209 209 209 IDRTK SLOPE [2] Prudhoe Bay Ubit 5,001 5,781 6,171 29,000 29,000 29,000 625 Sadlerochit reservoir 723 n1 3,62'.1 3,625 3,625 Sag River reservoir 100 130 200 ----13 [(I 25 -Lisburne reservoir 300 400 600 800 1,100 t,600 38 . 50 75 100 138 200 £ndicott 275 375 450 600 800 1,200 39 .53 63 84 112 168 Point TIIDISDn ~rea and Flax1an Island Are1 300 400 700 3,200 5,000 6,000 38 50 88 400 625 750 North P.rudboe B1y - Best Dod Area 50 75 100 6 9 13 Rilne Paint Area. 60 60 95 10 10 " &lydtr Bay Area 0 30 60 0 4 8 Shal uw·cretaceous Sands 0 750 2750 0 94 344 Kuparuk River Unit 573 998 1:198 135 220 260 72 125 150 17 28 . 33 -----·---------------·---------SUBTOTAL 6,659 8,999 12,324 33,735 36,120 38,060 839 1,133 1,551 4,226 4,527 4,776 UNDISCOVERED [31 N/A N/A 10 1 150 N/A N/A 15 1000 N/A 1/A 1,269 N/A N/A 1,875 ===== ===== ====== ==~= ====== ===== ==== ==-= ==== ===:t ===== ===== STATE TOTAL 6,801 9,1'41 22,616 36,999 39,.384 56,324 853 1,147 2,834 4,435 4,736 6,859 N/A Not apflitable. · m As of 2/83, Alaska Oil and &as Conservation Ca~~issian •t983 Statistical Report.• [2] As of 9184. Van Dyke, 1., •Proven and Probable Oil and Bas Reserves, North Slape 1 Alaska,• Septelber 25 1 1980, 1n~ersonal tOIIUDitation October 10& 1984. [3] • .Sees Big U.S. Arctic ••sources, • H and Gas Journal, Rove1ber 23 1981 1 1nd •Estitates of Undiscovered Recoverible Resources af Conventionally Producible Oil ·and Bas 1n the United States, a Su .. ary,• U.S. Geological Survey, OFR 81-192, 1981. S/D Tbl: T2_1, rev: 1/14/85 ' , PREDICTED NORTH SLOPE PRODUCTION SOURCE: DNR. 9/84 (THREE CASES} 2 1 .9 - t .8 ..,. 1. 7 1 .6 ?i 1 .5 0 1.4 ..... 1.3 <D 0. 1 .2 (.() 1 . 1 _J li.J 1 a::: a::: 0.9 <( CD z 0.8 0 0.7 _J 0.6 _J ~ 0.5 ·0.4. 0.3 0.2 0.1 0 1984 1990 19.95 2000 2005 2010 HIGH + MOST LIKELY LOW ESTIKATED AVAILABILITY OF NORTH SLOPE OIL FOR SALE l"bbl/dayl TABLE 2.2 -ftost Likely Case YEAR: 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 SUft C"bbll .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... .... ..•....... PRODUCTION Prudhoe Bay 1500 1500 1500 1475 1325 1175 1050 950 850 750 650 575 510 460 420 380 340 300 270 240 210 lBO 160 140 110 80 50 6,259,750 Kuparuk 120 lBO lBO lBO 200 200 200 200 200 200 170 145 120 100 80 75 65 55 so 40 35 30 25 20 15 10 0 1,056,675 Lisburne 0 75 100 120 120 120 90 75 70 65 60 55 50 40 30 20 10 0 401,500 Endicott 0 50 100 100 100 100 85 75 70 65 60 55 50 45 40 20 10 0 374,125 Hilne Point 0 30 30 25 20 15 15 10 10 10 0 60 225 Other 0 30 30 50 50 50 50 50 50 100 125 125 125 125 120 115 110 105 100 95 90 80 70 60 50 713:575 ---- -------------------------------- ------------------------ ---------------------------------------- -----------------TOTAL 1.620 1680 1680 1790.1735 1670 1540 1435 1305 1170 1025 965 . 880 BOO 730 670 600 530 460 395 345 305 275 240 195 150 100 8,865,850 ROYALTY OIL FOR SALE Prudhoe Bay [ 11 188 188 188 184 166 147 131 119 106 94 81 72 64 58 . 53 48 43 38 34 30 26 23 20 18 14 10 6 782,469 •:uparuk [11 15 23 23 23 25 25 25 25 25 25 21 18 15 13 10 9 8 7 6 5 4 4 3 3 2 I 0 132,084 Lisburne [11 0 0 0 9 13 15 15 15 11 9 9 8 8 7 6 5 4 3 I 0 0 0 0 0 0 0 0 50 188 Endicott [21 0 0 0 0 7 14 14 14 14 12 11 10 9 8 8 7 6 6 3 I 0 0 0 0 0 0 0 52:378 Hilne Point [3] 0 0 0 5 5 4 3 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 636 Other [11 0 0 0 4 4 b 6 6 6 6 6 13 16 16 16 16 15 14 14 13 13 12 11 10 9 8 6 89:197 ---------TOTAL 203 210 210 225 219 211 195 181 165 148 130 122 111 101 92 85 76 67 58 50 43 38 34 30 24 19 13 1,115,951 I ...... ROYALTY OIL SALES w HAPCO 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 35 255,500 I GYEA !Old) s I 825 1Proposedl[4l 5 5 5 4 4 4 3 3 3 2 13!657 TESORO IOldl [51 40 46 46 45 41 36 32 29 26 23 20 140,074 !New) [6] 26 26 26 23 20 18 16 15 13 ll 71,019 CHEVRON (7] 18 18 18 18 16 14 13 11 10 9 8 55,736 Coapetitive Sale 65 23,725 ---------TOTAL 98 195 130 128 119 109 101 95 89 83 76 35 35 35 35 35 35 35 35 35 0 0 0 0 0 0 0 561,536 ROYALTY OIL IN VALUE !Potential l 105 15 80 97 99 102 93 86 76 65 53 87 76 66 57 50 41 32 23 15 43 38 34 30 24 19 13 554,415 Note: nuabers aay not sua to totals due to rounding errors. [11 12.5% of production. [21 14.0% of production 1111eighted aver agel. £31 16.0% of production !weighted average). [41 1985-1994: 2.6667% of Prudhoe Bay production. [51 1984: 21.208% of Prudhoe Bay produdian. 1985-1994: 21.326% of Prudhoe Bay production •. [6] 1985-1994: 13.867% o'f Prudhoe Bay productian. [7] 1984-1994: 9.61 of Prudhoe Bay production. EST1: estray, rev: 1/14/85 III. CONSUMPTION FORECAST Summacy consumption of oil and gas 1n all major categories is forecast to increase in future years.l Consumption of natural gas will grow from 211 billion cubic feet (bcf) in 1985 to 259 bcf in 1999 (annual growth of 1.5 percent). Although industry currently consumes the majority of natural gas and is forecast to continue to be the dominant user, growth of gas use for space heating will outstrip growth in industrial use. OVer the next 15 years, use of gas for space heating will increase from 20.2 bcf in 1985 to 34.3 bcf in 1999 (3.9 percent annual growth). Use of gas for electricity generation will grow from 36.1 be f in 1985 to 43.6 bcf in 1999 (1.4 percent annual growth). The consumption of natural gas for industrial uses will grow from 154.3 bcf in 1985 to 181.6 be£ in 1999 (1.2 percent annual growth). Consumption of liquid petroleum will increase from l, 546 million gallons in 1985 (about 3 7 million barrels of crude oil equivalent) to 2,005 million gallons in 1999 (48 million barrels). This represents a 1.9 percent annual growth rate. The five and ten-year annual growth rates are 1.7 and 1.9 percent, respectively. Space heating use of petroleum will grow 2.1 percent annually. Vehicle transportation use will increase 2.0 percent annually. The use of fuel oil for electricity generation in 1985 reflects the introduction of several hydroelectric facilities which replace high-cost fuel oil generation. Fuel oil consumption subsequently increases, and the 15-year growth rate will be 2.0 percent annually. Industrial use of petroleum liquids will remain constant. Transportation Liquid Fuels Transportation fuel consumption will grow moderately with population growth in future years, increasing from 1,228 million gallons in 1985 to 1,614 million gallons in 1999 (Table 3.2). Jet fuel consumption will grow most rapidly (2.97 percent annually), followed by diesel fuel consumption (1.4 percent annually) and gasoline (.5 percent annually). Fuel-use efficiency will increase in all types of uses but will be most evident in highway gasoline consumption which is projected to decline on a per capita basis. Total consumption projected over the 15-year period from 1985 to 1999 is 21,056 million gallons. This is approximately equivalent to 501 million barrels of crude oil. lSee Methodology Appendix B for assumptions. -14- Space Heating Space heating fuel consumption will increase moderately with population and an increase in the size of the building stock relative to population. Natural gas use will grow more rapidly than fuel oil, from 20.2 billion cubic feet in 1985 to 34.3 billion cubic feet in 1999 (Table 3.3}. The relatively rapid growth of natural gas is attributable to the rapid growth of population in the railbelt as well as to the extension of the natural gas market into the Matanuska Valley. The expansion of the natural gas market is estimated to increase gas use by about 9 percent by 1995. Barrow, on the North Slope, is the only location outside of the railbelt presently served by natural gas. The majority of fuel oil used for space heating is consumed outside the rail- belt although fuel oil is important where natural gas is not available. Out- side of the railbelt, most space heating is done with fuel oil. Fuel oil con- sumption for this use grows from 176 million gallons in 198.5 to 237 million gallons in 1999. Utility Electricity Generation Natural gas use for utility electricity generation will exhibit strong growth in the next 15 years as the majority of incremental electricity demand grow~h in the railbelt is met with additions to natural gas-fired generation. Natural gas use increases from 36.1 be£ in 1985 to 43.6 be£ in 1999. The percentage of electricity in the railbelt provided by natural gas reaches a high of 81 percent in 1992 but declines in 1993 to 72.9 percent, when the Bradley Lake hydroelectric. facility comes on line.2 After 1993, the propor- tion of railbelt electricity generated by natural gas begins to increase, reaching 75.4 percent in 1999. Fuel oil use for utility electricity generation will grow at an average annual rate of only 2.1 percent. This is due to the availability of power from several recently completed hydroelectric plants in locations currently using fuel oil for generation. Industrial Fuel Use Increased use of natural gas in future years will be related to petroleum pro- duction. Dtis will be concentrated on the North Slope where expanded petro- leum activity will be concentrated. The other large use of natural gas, the production of Ammonia-Urea, will continue requiring constant amounts of natural gas. 2susitna hydro is considered in Chapter IV. -15- PRO~ECTED DEKAID FOR OIL ARD 6AS TABLE 3.1 YEAR: 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 TOTAL .... .... .... . ... .... .... I I I I . ... . ... ..... OIL (nillian 6allon1t STATE Vehicle Transportation 1228 1261 1276 1288 13l4 1341 1365 1387 1414 1450 1482 1514 1543 1580 1614 21056 ~ate Heat l76 l81 184 185 189 193 195 199 203 207 212 221 224 23S 237 3041 ility &eneration 37 32 33 34 34 36 36 37 39 40 41 44 45 49 49 95 Industry 105 105 105 105 105 105 105 105 105 105 105 105 105 105 105 1574 TOTAL 1546 1579 1598 1612 1642 1675 1700 1728 1761 1801 1840 1884 1917 1969 2005 26256 RAILBELT Vehicle Transportation 931 964 972 984 1007 1030 1056 1075 1097 1132 usa 1173 1204 1215 1261 16258 =race Heat 73 75 75 75 76 76 77 77 77 78 78 79 80 80 82 1158 ility 61meratian 14 8 8 8 a 8 8 8 8 8 8 8 8 8 9 127 Industry TOTAL NDN·RAILBELT Vehicle Transportation 138 136 137 137 135 134 132 131 Ill 127 126 129 126 130 123 1972 =race Heat 103 106 110 Ill 114 117 118 122 126 129 134 142 144 155 154 . 1883 ility Generation 23 24 25 26 26 28 28 29 30 31 33 36 37 40 41 458 Industry --mTAL &AS (8Cfl . I STATE ..... Vebitle Transportation 0.0 o.o o.o o.o 0.0 0.0 o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o 1;1\ I Sfate Heat 20.2 21.3 22.0 22.7 23.7 24.7 25.8 26.7 27.8 29.2 30.4 31.0 32.2 .32.8 34.3 404.7 U ility Generation 36.1 38.2 38.3 38.6 39.4 40.2 41.1 41.6 37.9 39.2 40.0 40.6 41.7 42.1 43.6 598.4 Industry 154.3 158.1 162.2 166.6 171.2 176.2 181.6 181.6 181.6 181.6 181.6 181.6 181.6 181.6 181.6 2623.0 TOTAL 210.6 217.6 222.5.227.8 234.3 241.1 248.5 249.9 247.3 250.0 251.9 253.2 255.4 256.5 259.4 3626.1 RAILBELT Vehicle Transportation o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o :fate Heat 20.1 21.2 21.8 22.5 23.5 24.5 25.6 26.6 27.6 29.0 30.2 30.8 31.9 32.5 34.0 402.0 il i ty &eneritian 35.6 37.6 37.7 38.0 38.8 39,6 40.5 41.0 37.3 38.5 39.3 39.8 40.9 41.3 42.8 588.8 Industry 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 87.1 1306.5 TOTAL 142.8 145.9 146.7 147.6 149.5 151.2 153.2 154.6 152.0 154.7 156.6 157.8 160.0 160.9 163.9 2291.2 NON-RAILBELT Vehicle Transportation o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o 0.0 o.o o.o o.o o.o o.o =rate Heat 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 2.7 ility Generation 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0,7 0.8 0.8 9.6 Industry 67.2 71.0 7~.1 79.5 84.1 89.1 94.5 94.5 94.5 94.5 94.5 94.5 94.5 94.5 94.5 1316.5 TOTAL 67.9 71.7 75.8 80.2 84.9 89,9 95.3 95.3 95.3 95.3 95.4 95.4 95.4 95.6 95.5 1328.8 VEHICLE TRANSPORTATION FUELS DE"AND Ul TABLE 3.2 !Hillion Gallons! YEAR: 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 TOTAL STATE Jet Fuel 542 560 573 586 603 621 639 656 676 698 721 743 765 791 816 9991 Civil ian Do11estic 282 297 308 318 333 348 363 377 394 414 433 453 472 495 517 5806 "ilitary and International 260 263 265 268 271 273 276 279 282 284 287 290 293 296 299 4185 Gasoline 249 253 252 250 252 253 254 255 256 259 261 262 263 265 267 3850 Aviation 19 19 19 19 20 20 20 20 21 21 22 22 22 22 23 310 HighMay 220 224 223 221 222 223 224 224 225 227 228 230 230 232 233 3386 Harine 9 10 10 10 10 10 10 10 10 11 11 ll 11 11 11 155 Diesel 437 448 451 452 459 466 472 476 483 493 501 508 514 524 531 7215 HighMay 303 :m. 313 313 318 323 327 330 335 342 347 352 357 363 368 5002 Harine 134 138 138 139 141 143 145 146 148 151 154 156 158 161 163 2213 TOTAL 1228 1261 1276 1288 1314 1341 1365 1387 1414 1450 1482 1514 1543 1580 1614 21056 RAILBELT Jet Fuel 448 464 472 483 498 512 528 541 556 576 592 603 623 632 660 8187 Civilian Domestic 231 245 252 260 272 284 298 309 322 339 354 365 382 393 416 4722 Hilitary and International 217 220 220 223 225 227 230 232 234 237 238 238 241 239 244 3465 Gasoline 184 187 186 185 186 187 188 188 189 191 192 191 192 190 193 2829 Aviation 15 16 16 16 16 16 17 17 17 17 18 18 18 18 18 252 High~eay 163 166 164 163 164 165 166 165 165 167 168 167 168 166 . 168 2485 I Harine 6 6 6 6 6 6 6 6 6 6 6 6 7 6 7 92 -Diesel 299 313 314 315 324 332 340 345 352 365 374 379 389 393 408 5242 -...J HighMay 205 216 218 219 226 232 239 243 249 260 268 273 280 285 297 3710 I Harine 94 96 96 97 98 99 101 102 103 lOS 107 107 109 lOB 111 1533 TOTAL 931 964 972 984 1007 1030 1056 1075 1097 1132 1158 1173 1204 1215 1261 .16258 fiON-RA I LBEL T Jet Fuel 94 96 101 103 106 110 111 115 120 123 129 141 142 159 157 1805 Civilian Doaestic 51 53 56 58 60 64 65 68 72 75 80 88 90 102 102 1084 Hilitary and International 43 43 45 45 45 46 46 47 48 48 49 53 52 57 55 720 Gasoline 65 65 66 65 66 . 67 66 66 67 68 69 72 71 75 73 1021 Aviation 3 3 4 4 4 4 4 4 4 4 4 4 4 5 4 58 HighMay 57 58 59 58 58 59 58 59 59 59 61 63 62 66 64 901 Harine 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 63 Diesel 138 136 137 137 135 13.4 132 131 Ill 127 126 129 126 130 123 1972 HighMay 98 94 95 94 92 91 88 . 87 85 81 79 80 76 78 72 12'i2 "arine 40 41 42 42 43 44 44 44 45 46 47 49 49 52 52 680 TOTAL 296 297 304 305 307 310 309 312 318 317 324 342 339 365 353 4798 [11 Includes industrial, 1ilitary and govern1ent use. Excludes pipeline fuel. I ..... 00 I ·SPACE HEAT FUELS DEIIAND TABLE 3,3 OIL ("il1ion &allons) STATE RAILBELT NDN·RAILBEll &AS tBCf) STATE RAILBELT Current narket "atanuska Valley NDN-RAILBELl UTILITY 6ENERATION BEllAND OIL ("illion &allons): STATE RAILBELT SOUTHEAST REST OF STATE &AS lBCF) STAlE RAILBELT SOUTHEAST REST OF STATE YEAR: 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 TOTAL YEAR! .... .... .... ..... .... .... .... .... .... .... .... .... .... .... . ... 176.4 181.0 184.3 185.4 189.0 193.4 194.6 198.6 202.8 207.0 212.3 220.7 223.8 235.0 236.8 3041.1 73.2 74.8 74.6 74.6 75.5 76.3 76.9 76.9 77.1 78.2 78.5 78.8 80,1 80.3 82.4 1158.1 103.3 106.2 109.7 110.8 113.5 117.1 117.7 121.7 125.7 128.8 133.8 141.9 143.7 154.8 154.4 1883.1 20.2 21.3 22.0 22.7 23.7 24.7 25.8 26.7 17.8 29.2 30.4 31.0 32.2 32.8 34.3 404.7 20.1 21.2 21.8 22.5 23.5 24.5 25,6 26.6 27.6. 29~0 30.2 30.8 31.9 32.5 34.0 402.0 20.0 21.0 21.4 21.9 22.7 23.5 24.3 25.0 25.8 26.9 27.8 28.4 29.5 30.0 31.4 379.9 .o 0.2 0.4 0.6 0.8 1.0 1.3 1.5 1.8 2.1 2.4 2.4 2.5 2,5 2.6 22.0 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 2.7 TABLE 3,4 19.85 1986 1987 1988 1989 1990 1991 l'l92 1993 l'l94 1995 1996 It'll l'l98 1999 TOTAL ..... ..... 36.7 31.6 33.1 33.5 34.2 35.5 36.1 37.4 38.6 39.5 41.2 44.3 45.2 48.9 4'l.2 585.0 13.6 7.8 7.8 7.8 7.9 8.0 8.o 8.1 8.1 8.2 8.3 8.4 8.4 8.5 8.6 127.5 5.1 5.4 6.6 7.1 6.8 7.4 8.1 9.1 9.3 9.6 10.2 10.9 11.9 12.1 13.2 132.9 18.0 18.5 18.7 18.6 19.5 20.1 20.0 20.2 21.1 21.7 22.8 25.0 24.9 28.3 27.4 324.7 36.1 38.2 38.3 38.b 39.4 40.2 41.1 41.6 37.9 39.2 40.0 40.6 41.7 42.1 43.1. 598.4 '35.6 31.b 37.7 38.0 38.8 39.6 40.5 41.0 37.3 38.5 39.3 39~8 40.9 41.3 42.8 588.8 o.o o.o o.o o.o o.o o.o o.o o.o o.o o.o 0.0 o.o o.o o.o o.o o.o 0.5 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7 0.7 0.7 t.B 0.8 9.6 INDUSTRIAL FUELS DE"AND TABLE 3.5 · YEAR: 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 TOTAL . . . . I I I I .... . ... . . . . . ... . ... I I I I . ... . ... . ... . ... . ... . ... .... OIL l"illion &allons) STATE 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 104.9 1573.5 Pipeline Fuel 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0' 84.0 84.0 1260.0 Electricity Generation 20.9 20.9 20.9 20.9 20.9 20.9 20.9 20,9 20.9 20.9 20.9 20.9 20.9 20.9 20.9 313.5 GAS IBCFI STATE A••onia-Urea Production 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 50.0 750.0 "ilitary PoMer Generation 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 69.0 Petroleu1 Production '19.7 103.5 107.6 112.0 116.6 121.6 127.0 127.0 127.0 127.0 127.0 127.0 127.0 127.0 127.0 1804.0 Pipeline Fuel 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 190.5 "iscellaneous 87.0 90.8 94.9 99.3 103.9 108.9 114.3 114.3 114.3 114.3 114.3 114.3 114.3 114.3 114.3 1613.5 lte1:lndection 1te11:LN RAILBELT l111onia Urea 50.0 50.0 50.0 50.0 50.0 50.0 50 .• 0 50.0 50.0 50.0 50,0 50.0 50.0 50.0 50.0 750.0 "ilitary PaMer Production 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 4.6 69.0 Petroleu1 Production 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 487.5 Pipeline Fuel o.o o.o 0.0 o.o 0.0 0.0 o.o 0.0 o.o o.o o.o o.o o.o o.o 0.0 o.o "iscellaneous 32.5 32.5 32.5 ·32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 487.5 I Ilea: lndection 1-' \0 lte1:LN I NDN-RAILBELT Petroleu~ Production 67.2 71.0 75.1 79.5 84.1 89.1 '14.5 '14.5 94.5 94.5 94.5 94.5 94.5 94.5 94.5 1316.5 Pipeline Fuel 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 12.7 190.5 "isceltaneous 54.5 58.3 62.4 66.8 71.4 76.4 81.8 81.8 81.8 81.8 81.8 81.8 81.8 81.8 81.8 1126.0 lte•:lnjection The major industrial use of fuel oil (not including transportation) is also in the petroleum industry. Pipeline fuel for the Alyeska pipeline is the laxgest element of this. In addition, a significant amount of fuel is used for electricity generation. Both of these uses are projected at constant levels. -20- IV. AHALYSIS 01' SURPLUS Sumlll&ey Under reasonable assumptions about recoverable reserves and Alaska consump- tion8 the current inventories of both oil and gas are more than sufficient to meet the presently identifiable needs of Alaskans for the next 15 years. The state royalty shares are also sufficient to meet in-state demand. Liguid Petroleum Table 4~1 shows that the cumulative 15-year Alaska demand for liquid petroleum is approximately 625 million barrels of crude oil equivalent. This is equal to approximately half the reserves of royalty oil and is 1 percent of total reserves. Ho attempt has been made to compare petroleum products produced at Alaska refineries with petroleum products consumed in the state~ Currently the capacity of Alaskan refineries exceeds Alaskan consumption (about 81 thousand barrels per day), but the product mix which the refineries can produce does not match the product mix demanded. The resulting cross-hauling of crude oil out of Alaska and refined products into the state is a co11110n feature of petroleum markets in general and does not represent an inefficient distribution of refining capacity or mismatch of supply and demand. Natural Gas. Table 4.1 indicates that the cumulative 15-year Alaska demand for natural gas is 3.626 trillion cubic feet of gas. This is approximately 77 percent of the state royalty share of gas in the combined current inventory at Cook Inlet and on the North Slope. Since the transportation of natural gas normally requires a pipeline, partic- ular markets for gas which are linked by pipeline to supplies are relevant for the determination of excess supply. Table 4.1 shows that there is a net surplus in both the Cook Inlet and North Slope markets. The Alaskan royalty share of Cook Inlet gas alonep however, is insufficient to meet the projected Cook Inlet requirement a over the next 15 years. Projections Beyond Current Inventory We assume recoverable reserves represent a 15-year inventory of petroleum in the ground based upon historical reserve-to-production ratios. Because a very sizable investment is required to develop a petroleum reservoir into recover- able reserves, reserves will be "proven up" at a rate to maintain sufficient inventory consistent with the growth in demand. Excessive proven reserves, like excessive inventories, result in unnecessary carrying costs to reservoir owners and will be avoided if possible. -21- This is the basis for the 15-year time horizon for demand used in this analysis. As time passes, the growth in demand will stimulate the search for reserves to replace those produced, and markets will work to keep supply and demand in balance. Sensitivity of Results The positive net surpluses of oil and gas calculated in this chapter are insensitive to changes in the assumptions underlying the projections. These are discussed in turn and shown in Table 4.2. Reserve Estimates Because the low reserve estimates are quite similar to the· mid-range esti- mates, the positive oil and gas surpluses are not significantly affected by using low reserve estimates. Economic Growth Faster population growth will accelerate the use of liquid fuels more than natural gas because a lar-ger portion of liquid fuel use is population sensi- tive. Even so, the net surplus of petroleum liquids would be reduced only marginally by growth of population-related consumption at double the base case rate. Increased use of natural gas would reduce the surplus by an equally small percentage. Export of Gas To the extent natural gas is exported, it is unavailable for the local market. Cumulative exports over the next 15 years from current operations are projected to be about 945 billion cubic feet. If a facility comparable to the Pacific Alaska LNG project were built, it would annually export 160 billion cubic feet. With an assumed first year of operation of 1990, cumulative exports to California through 1999 would be 1,600 billion cubic feet. Com- bined exports to Japan and California would be 2,545 billion cubic feet, reducing reserves for instate use, and the net surplus, by 9 percent. In the absence of new reserves, the net surplus in Cook Inlet under these assumptions would be negative. Susitna Hydro If Susitna hydro were built, it could begin to replace electricity generation by natural gas and fuel oil in 1994. If natural gas use were· cut back 75 percent beginning in that year, cumulative gas consumption would decline 182 billion cubic feet. Fuel oil use for electricity consumption in the Rail- belt could be eliminated at a savings of 50 million gallons (a little more than one million barrels). _..,..,_ SURPLUS OIL CALCII.ATIDI IRillion B~rrelsl TABLE 4.1 OIL £21 &As m IHillion Barrels! IBCFl --------------------Total State Total State Royalty Royalty STATE Reservn Ul 9,141 . Estiaated Production 220 1,147 28 39,384 240 4,736 29 fro• reserves thru 1984 Estiaated reserves 8,921 1,119 39,144 4,707 as of Jan. 1 1985 Esti11ted cumulative consUJption, 625 625 3,626 3,626 1985-1999 (15 ~earsl 11ET SIIRPI.US IDEF CIT) 8,296 494 35,518 1,081 COOK III.ET Reservn Ul 142 15 3,264 209 Estiaated Production 20 2 220 14 from reserves thru 1984 Esti1ated reserves 122 13 3,044 195 as of Jan. 1 1985 Estitated cuulative cansupti1111 1 2,297 2,297 1985-1999 115 rears! NET SURPLUS IDEF Cin 747 12,1021 IIORTH SLOPE Reserves Ul 8,999 1,133 36,120 4,527 Esti11ted Production 200 25 20 3 fro1 reserves thru 1984 Esti1ated reserve! 8,799 1,108 36,100 4,524 as of Jan. 1 1985 Estimated cumulative consu1ption 1 1,329 1,329 1985-1999 (15 rears) NET SURPLUS IDEF CITI 34,771 3,195 [1) North Slope as of 9/1/84 Caok Inlet as of 12/1/83. [2] Author's esti1ate of pro~uction year to end. Production fro• state roualty share is proportional to st1te royalty share of reserve. £31 Total gas duposition net of reinjection, fro• Section 2. Production frn state royalty shut is proportion of state royalty gas in total. SENSITIVITY ANALYSIS OF NET SURPLUS TABLE 4,2 Percent Reduction in Net Surplus liqilid Petroleu1 l1illion barrels! Lo1 Reserve Esti1ate 28.0 I 501 increase in gra•th of 0.5 1 papulation·nlated r:ansu1ption Export of lH& Susitna Hydra 0.0 1 Natural &as available in Fairbanks +2,0 I Natural &as IBCFI -23- 7.0 1 0.5 1 9.0 1 0.5 1 o.o 1 Natural Gas Availability in Fairbanks If, by some means.. natural gas became available in Fairbanks, electricity generation and space heating in Fairbanks could be converted to gas. 'Ibis could increase annual natural gas consumption for electricity generation by 5 billion cubic feet as coal and fuel oil use were backed out. FUel oil use would fall by 8 million gallons annually. Natural gas consumption for space beating would gradually replace fuel oil and coal and could eventually capture 75 percent of the market. If gas became available in 1993 and captured this share of the market by 1997, gas consump- tion for space heat could increase 25 billion cubic feet, and fuel oil con- sumption could fall by 145 million gallons. The net surplus of gas would fall very marginally as a result of these changes and the net surplus of liquid fuels increase very marginally. -24- V. HIS'roRICAL OIL AND GAS PRODUCTION AND CONSUMPTION Oil Production and Consumption Historical oil production and consumption for 1977-84 are presented in Table S..l and Figures 5.1 and 5.2. Consumption data for these years are derived from the Department of Revenue's monthly reports, using that department's present major fuel categories. Between January 1977 and September 1982, several categories were added and deleted. Table 5.2 shows these changes and the correlation between past and present categories. These data are statewide figures only. Regional breakdowns, shown in past issues of this report, are not possible because DOR stopped reporting fuel sales by judicial districts in July, 1982. In-state refinery production and fuel imports for 1982 are tab- ulated in Tables 2.4 and 2.5. These data are taken from "Fuel Consumption and Pricing in Alaska, A Regional Analysis."l Gas Production and Consumption Historical natural gas production and major consumption items are presented in Table 5.3 and Figures 5.3 and 5.4. Production, consumption by field opera- tions and commercial sales data are compiled from Oil and Gas Conservation Commission monthly reports whereas individual major consumption figures are from consumers or taken from consumer reports to DO&G. lKeiser, G., Teal, Analysis," Alaska January 1984. D., "Jruel Consumption and Pricing in Alaska, A Regional State Legislature, House Research Agency Report 83-C, -25- 700 100 ~ ~ ,.. l 400 Ill 1! AI ~00 c ~ =-:1 .200 100 0 1977 1.5 1.4 1.~ 1.2 ~ 1-.1 ~ 1 8 0.9 Ill O.B c 0 0.7 =a 0 o.a c _g o.e 5 ::I 0.4 0.3 0.2 0.1 0 1977 c Total FIGURE 5.1 OIL P,_OOUC'nON. H177-1'SI84 1980 cTotal + Throughput, oLoadings PS Ill Valdez FIGURE 5.2 OIL CONSUMPTION. 1977-1984 1980 + Aviation ~Aviation Gas Jet -26- .ill. Marine Diesel )(Other Gas at 1984 1984 v Other Diesel FIGURE 5.3 ~ P"ODUCTJON. 1~71-1~84 1..2 T.1 1 O.tl 0.5 b 0.7 I. ' O.I!S i 0.5 0.4 0.3 0.2 0.1 0 1971 197S 19150 1984 a Total +Injection o Net of Injection FIGURE 5.4 GAS CONSUMPTION. 1971-1gS4 210 200 190 11!0 1?'0 180 150 140 b 130 ~ 120 ., 110 c:L. 100 i 90 80 70 ISO 50 40 30 20 10 0 1971 1975 19BO '1984 a Total +LNG o Ammonia-ta !"ower )( Utilities 'f TAPS Uria Generation -27- HISTIIIICAL DIL PRODCUIJI All COitSUIPJIOI: STAT£ YEM: 1977 1978 1979 1980 1981 1982 1983 1984[1) •.•..•.....••.••••.....•.............•.••..........•.•..•..•..•• PROIUCTIOI IRillian Blrrelst £21 587.339 618.910 625.527 626.556 Brass Praductioa 171.318 447.810 511.335 591.640 TAPS Throughput, PS It 112.315 397.149 467.939 554,934 556.067 591.142 600.859 607.961 EJPDRTS lliiliDI Barrels) [2] Liftings at Valdez 96.669 394.080 464.394 548.895 547.026 583.370 592.319 599.672 COISIIKPTIOI lllillian 6allansl m Aviatian Bas 16.770 15.830 16,925 16.912 18.754 16.596 15.244 17.977 u::gt 1.521 0.685 0.552 0.558 0.574 0.589 0.498 0.647 Tix It 15.249 15.145 16.373 16.354 18.180 16.007 14.746 17,330 Aviation Jtt 330.744 363.607 415.164 416~184 400.177 432.366 517.575 598.984 Exe:t 227 •. 581 250~601 288.974 286. uo 247.619 99.957 242.815 293.060 ·Taxa lei 103.163 113.006 126.190 130.074 152.558 332.409 274.760 305.924 ltlrine &as 11.766 7.714 8~296 7.598 7.602 7.878 8.568 9.777 u:gt 5.707 0.554 0.292 0.025 0.085 0,032 0.052 0.114 Tu le 6.059 7.160 8.004 7.573 7.517 7.846 8.516 9.663 .!Iarine lii!Dl 38.613 51.985 59.492 67.711 72.282 99.443 147.569 149.798 Exe:t 6.396 10.116 6.325 5.370 5.153 30.443 75.395 72.087 Tu le 32.217 41.869 53.167 62.341 67.129 69.000 72.174 77.7U other &is 186.213 187.359 181.329 177.353 186.446 210.644 197.968 234.833 Ei::t 5.094" 8.290 7.527 8.162 9.084 12.809 10.881 19.017 Tu It 181.119 179.069 173.802 169.191 177.362 197.835 187.081 215.816 Other Dii!Dl 165.752 184.876 269.377 302.647 326.440 411.125 420.279 410.303 Ex::t . 46.160 54~050. 120.960 120.939 117.074 187.856 178.494 163.082 Tax le 119.592"130.826 148.417 181.708 209.366 223.269 241.785 247.221 TDTill COJG-TIIJI 749.858·811.371 950.583 988.405 1,011.701 1,178.052 1,307.203 1,421.672 Ul Est·jlatl!f frO! gar~~reNIJ reports. [2] Alllia Oil and iS Conservation Co11ission, •statistical Report • 1977-83. £31 Alaska Depart~~nt of Revenue, "Report of Notar Fuel Sold or Dislributed in Alaska.• t4l Average annual grawtll. · S/D 1111: 15_1, rev: 1/7185 FUEL CATAGORIES, DEPARTNENT OF REVENUE l/77-9/82 lDrder rurnngl!dJ 1977 1978 1979 1980 1981 1982 TABLE 5.1 Bra.th, IW. 1984 [4J 5.76 I 7.35 1 7.25 1 2.14 1 8.68 1 4.03 z 19.29 1 3.84 I 14.21 I 9,80 I Table 5.2 10182-Present . . . . . . . . Aviation 615 Exe~pt ---------------------------------------------------------------------Aviitlon &as Exetpt Taaabl.--------------------------------------------------Taxable ~·~~~~-~~~--~----~~~~· .. ·············~·······~~~·········· .. ···· .. ····~--~~---·~·····~~--.... ··~~~---.. -~ Aviation Bonded Elupt --------------------------------Aviation .Jet Exe11pt Aviation .Jet Exe~pt ---------------------------------------Exetpt Tuible------------------------:----------Taxible ........ ___ .,_ ......................... --........................................................ _____ ....., ..................................... ___ , ____ ......... .. lfarine Non-Prop. Exupt --1 · lfarint &as £11etpt !Iarine Sas E11upt --------------------------Exetpt Tuible-----------------------------____;_-------------------Ta11able ··~-~·····~~~~~~~~~~~~~~~~~~~ .... ~ .. -~~~~~-·~~·~~~~~·~~·~··· .. ~~~~~·~~~~-·~ .. ~~-~~·~~--~~~~~~·· .. ·~~-~-~--.. ~~~~ Exei!IDt --QGDC·--------------------------------------lluine Diesel Exupt lua&lr-----------------------------------------Taxable !Iarin~ Diesel llarine other T11able 1---------------------------------------------1 Taxable ~~~ .. ~~~··~·~~~·~~·~~~·~· .. ·~··~~·~--~ ... ~~~~~~··~···~~~~~~·~·~~~~~~ .. ~-·~~···~~~~·-~·~~~._.~·-···~~···· Off-Highway &As Exe~pt 1---1 Other Sas Exe1pt Higllttay Gas Exe~pt ----------·-----------------------............. , &eiJit Taxlble-----------------------------------------------------------------l Taxable ~-~~~--.. ·~~~-... ~~,~·~~·~~~ .. ·~~··~~~·~~~,~~~~~···~,~~~·~~~··~·~· .. ~·~~·~·~~~~-~~~·~~ ... ~ Off-Highway Diesel Exe1pt 1----------. -----------------·----------------1 High•ay Diell!l Eaeapt -----------------------------------------------------------------------1 Tuable----------------------------------------------------. I Highway Other Taxable :------------------------------------1 other Type Fuel Taxible----------------------------1 S/D Tbl: T5.2J rev: 117/85 -28- Other Diesel Exetpt En1pt Taxable Taxable Taxable I N \Q I HlSTIIliCAL &AS DISPOSl'TlOII AIID SALES: STATE IBCf) TABU 5.3 lrclllh YEAR:• 1971H 197211 197311 197411 1915 l976 1977 1978 1979 1980 1981 1982 1983 1'84UJ 1978! ..•..••••..............•....................•••......•.•......•.........•.......................•.•..... 1984 [IIJ PRDDUCTIOI &ross Production [2] 227.940 222.790 225.235 229.909 256.399 271.162 375.832-602.687 738.485-898.155 948.554 1,090 •. 655 1,171.121 1,189.309 12.00 l lnlection [3J 73.88 76 •. 13 37.78 86.91 83.007 97.077 171.188 375.405 503.003 661.947 695.515 817.863 886.364 898.946 15.67 I lie Pradudian 154.060 146.660 137.455 142.999 173.392174~085 20 •• 644 227.282 235.482 236.208 253.039 272.792 284.757 290.363 4.17 J, ClliSUII'Tlllll Field Operitians 45.250 36.560 20.900 23.890 31.639 28.322 48.859 55.180 57.865 62.001 62.166 72.876 77.590 1!1.793 8.25 I Vented and fltred [3~ 33.18 20.98 6.93 7.05 10.557 6.674 15.729 6.183 4.551 4.846 5.660 6.983 S~OIM 6.737 Used on Le1ses [3] 10.96 14.86 12.42 14.31 17.963 18.424 29. '"' 35.055 38.123 43.515 44.592 52.724 5&.993 65.641 ShrinlciJe Ul 1.11 0.72 1.55 2.53 3.119 3.22~ 3.145 3.426 2.847 2.4:18 2.4:14 2.602 2.726 2.391 Otber [ J 0.00 o.oo 0.00 0.00 0.000 0.000 0.019 R0.516 12.344 11.142 9.480, 10.567 10.887 13.824 Sold l2l .121.717 123.717.130.937 130.319 141.754 145.763 155.785 172.101 177.616 174.208 190.873 199.91~· 207.167 201.370 2.67 1 LN& [4J 63.24 59.87 60.99 61.87 64.717 63.509 66.912 60.874 64.111 54.844 68.823 64.438 67.72'1 65 •. 471 l.22 I Aaonii-Urea [51 19.49 20.58 20.64 22.10 23.888 24.257 ?.11.620 40.879 51.657 54.699 53.836 55.220 50.3311 50.890 0.67 '& Pater generttian 14.691 15.379 16.700 17.448 25.461 27.613 28.590 29.718 33.141 33.520 33.947 36.222 36.651 35.030 2.71 1 Pubhc l6l 8.142 8.906 10.631 11.764 19.619 22.189 23.590 24.592 28.155 28.157 29.386 31.392 32.055 30.939 llilitlr{ [61 6.549 6.473 6.069 5.684 5.-842 5.424 5.000 5.126 4.986 4.763 4.561 4.830 4.596 4.091 &is utili ies 10.238 13.099 14.757 15.128 12.092 12.551 12.683 13.454. 14.045 15.521 16.213 19.564 19.518 19.1107 6.66 z Residl!fttill [6] 5.440 6.027 6.519 6.717 5.548 5.916 6.010 6.536 6.911 7.773 8.385 10.520 10.609 10.641 Couerdil l6l 4.798 7.072 8.238 8.411 6.544 6.635 6.673 6.918 7.134 7.748 7.828 9.04~ 8.909 9.166 Producers [7] • 13.396 12.587 10.414 12.477 11.588 6.703 10.523 6.958 5.190 5.601 11.383 12.698 12.039 Refiaers til • 0.560 1.939 2.465 3.268 I. 785 0.199 0.237 0.285 0.380 0.316 0.486 0.502 0.506 8.39 1 TAPS [91 o.ooo o.ooo 0.000 o.ooo 0.000 o.ooo •• 754 6.949 8.648 ·10.686 U.l06 11.952 13.277 12.636 10.48 z Other Sales [101 14.058 0.833 3.324 0.894 (0.2091 4.460 10.324 1.467 (1.229) (0.632) 1.031 0.649 6.454 5.192 t Not available. It Railbelt only; does not include North Slope. til Esti11ted fro• ptrt-yearly reports of cited sources. [2] Alaska Oil and &is Conservation Co11issian "Report of Gas Disposition • aonthly reports. lll 1971-74: Sttnford Research lnstitutel "Naiural &1s Deland and Supply ia the Ye1r 2000 in the Coat Inlet B11in of South Central Altskt 1 " Nov. 1977. 1975-84: Al11ki Oil tnd Gas Conserva ion C0111issionL "Report of &as Disposition,• IDnthly reports. [4] 1971-74: Sttnfard Research Institute, "N1turil 611 Ulland 1nd Supply to the Year 2000 in tbe Coole Inlet Basin of South Central Alaska,• Nov. 1977. 1975-79: SUI of J) production frDI Kenai alid BIIVI!r Creek gil fields in: Altslcl Oil 1nd &11 I:Qnservation Cllllislian 1 "R"'II't of &11 DIIJIDiition,• and 2) Silts fro• Korth Coale Inlet gas field in: Altska Oil tnd Bls Canstrvatian CDIIissiao, "Kenai &is Sales.• 1980-84: Rayilty repll'ts froa productrs to Divi.sian of Oil and &1s. [5] 1971-74: Sttnford Research Institute, "N1turil &as D111nd 1nd Supply to the Yeir 2000 in the Coat Inlet B1sin of South Central Alaska • Nov. 1977. 1975-79: SUI of 1) siles fro• Kenai and Detver Creek g1s fields to Callier Chetictl in: Alast1 Oil and &as Canservttian Colalssian, •lenai &as Sales,• and 2) sties fraa KcArthur River g1s field in: Altska Oil tnd &as Conservttion COIIission, "llonthly Report of Gas Disposition.• 19BD-84: Ray1lty reports fro1 producers to Division of Oil and &1s. [6] Annual reports fr01 Alast1 Pipeline Co., ENSTAR 1nd Kenai Utility·Service Co. to Alask1 Public Utilities Callission tnd BarrDM Utilities 1nd Electric Cooperative Inc. penan1l caaauniution. l7l Raytlty reports lrai Union to Division of Oil 1nd 61s, itea Rental Bas. l8l Roytlty reports fros Union to Division of Oil and &1s 1 ite1s Aliskl Pipeline-.ikiiki, Chevron Rent11 &is and letering. [9] Rai1lty reports fraa ARCO to Division of Oil 1nd &is. [101 Ca culated difference bet•een "Sold" and sua of listed "Sold" iteas • . UU Average ;annual grDMth. I \..) 0 I HISTORICIII. &AS DISPOSITION AID SALES: RAILBB.T l8Cf) TABLE 5. 3 lcant. J YEAR: 1971 1972 1973 1974 1975 1976 1977 1978 1979 1910 1981 1982 1913 1984111 ermt~ ••••••• 1111151 ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• . ..... . . ..... . 1984 t91 PRODUCTIOII Gross Produttiun [2] lnjettian E3J 227.940 222.790 225.235 229.909 252.554 265.253 279.961 293.800 305.075 299.942 299.051 309.119 306.343 300.922 0.40 I 73.88 76.13 87.78 86.91 83.007 n.on to3.108 to3.551 112.868 115.437 1oo.uo 102.248 94.ltm u.m -1.61 1 Net Produtti on 154.060 146.660 137.455 142.999 169.547 168.176 176.853 190.249 192.207 184.505 198.641 20..871 211.958 206.997 1.42 'I CIIHSUIIPTJ liN Field OperatiQns Vented and flared [3] Used on leases l3l Shrinkage £3) other l3l Sold l2l LN& lU A•onia-Urea [5] Power generation Public [61 IIi 1i tary £61 &as Ut ill ties Residential £61 Co1aercial [61 Producers [7] Other Sales l8l t Not ava'ilable. 45.250 36.560 20.900 23.890 28.830 24.467 24.416 25.949 24.101 22.304 20.559 33.18 20.98 6.93 7.05 9 •• 96 5.421 4.848 3.170 2.710 3.045 3.175 10.96 14.86 12.42 14.31 16.215 15.822 16.404 16.228 14.564 14.608 14.950 1.11 0.72 1.55 2.53 3.119 3.224 3."145 3.426 2.847 2.438 2.434 o.oo o.oo o.oo o.oo o.ooo 0.000 0.019 .2.425 3.980 2.213 0.000 121.717 123.717 130.937 130.318 140.717 143.710 152.437 164.300 168.106 162.201 178.082 63.24 59.87 60.9'1 61.87 64.717 63.509 66.912 60.874 64..lll 54.844 68.823 19.49 20.58 20.64 22.10 23.888 24.257 28.620 48.879 51.657 54.699 53.836 14.691 15.319 16.700 17.448 25.461 27.613 28.590 29.718 33.141 33.520 33.632 8.142 8.906 10.631 11.764 19.619 22.189 23.590 24.592 28.155 28.751 29.071 6.549 6.473 6.069 5.684 5.842 5.424 5.000 5.126 4.986 4.763 4.561 10.238 13.099 14.757 15.128 12.092 12.551 12.683 13.454 14.045 15.521 15.178 5.440 6.027 6.519 6.717 5.548 5.916 6.010 6.536 6.911 7.773 7.950 4.798 7.012 8.238 8.411 6.544 6.635 6.673 &.918 7.134 7.748 7.828 I 13,396 12.587 10,414 12.477 11.588 6.703 10.523 6.958 5.190 5,601 14.059 1.393 5.263 3.358 2.022 4.192 8.929 0.852 U.806J 11.5731 0.412 lll Estiaated fro• 'art-yearly reports of cited sources. l2l Alaska Oil and &as Conservation Coaaission1 "Report of Gas Disposition • aonthly reports. 20.957 3.494 14.861 2.602 o.ooo 11§.913 64.438 55.220 35.818 30.988 4.830 19.025 9.981 9.044 11.383 0.029 19.~0 2.560 14.056 2.726 0.038 192.518 67.729 50.338 36.169 31.573 4.596 19.111 10.202 8.909 12.698 6.533 20.479 3.292 14.593 2.591 0.003 186.519 65.471 50.890 34.545 30.454 4.091 19.293 10.127 9.166 12.038 4.282 -3.17 l 2.14 1 1.22 l 0.67 1 2.54 l 3.63 1 6.19 l l3l 1971-74: Stanford Research lnstitute1 •Natural &as Deaand and Supply to the Year 2000 in the Cook Inlet Basin of South Central Ala1k1,• lov. 1977. 1975-84: Alaska OU 1nd &as Canservation Co11ission1 "Report of &as Disposition, • 1011thly reports. l41 1971-74: Stanford Research Institute, "Natural &as ueaand and Supply to the Year 2000 in the Cook Inlet Basin of South Central Alaska,• Nov. 1977. 1975-79: Sua af ll production fro• Kenai and Beaver Creek gas fields in: Alaska Oil 1nd 61s Conser~ation to11ission, "Report of 611 Dlspasition,• and 21sales froa North took Inlet 9as field in: Aloska Oil and Gas Conservation Coaaissian, •Kenai &as Sales.• 1980-84: Royalty reports of producers to Di~is1on of Oil and &as. . l5J 1971-74: Stanford Research Institute, •Natural &u De1and and Supply to thLt Yeu 2000 in the CIHit Inlet Basin of South Central Alaska • Nov. 1971. 1975-79: Sua of I! sales fr01 Ktnai and Beaver Creek gas fields to Collier thetical in: Alaska Oil and &as Conservation Co11issian, •ken1i &11 Siles,• and 2) sales froa McArthur River gas field in: Alaska Oil and &as Conservation CD11isslon 1 •~onthly Report of 611 Dispasition,• 19BG-84: Royalty r:eports of producers to Division of Oil and &as .• (h) (7] (8] [9J Annual reports fro• Alaska Pipeline Co., EISTAR and Kenai Utility Service Co. to Al1st1 Public Utilities &D11ission. Royalty reports fro1 Union to Division of Oil and &as 1 itea Rental Bas. Calculated difference bet.een •&old• and su1 of listea "Sold" iteas. Average annual grcmth. HISTORICAL 6AS DISP,OSITION AND SALES: NON~RAILBELT IBCFl TABLE 5.3 lcont.l YEAR: 1971 1972 1973 1974 1975 1976 1·977 1978 1979 1980 1981 1982 1983 1984[1] SroMth, 1978- PRODUCTION ..•...•..•.... ······· .•...................•...•..•.....• ······· .•••...••...... 1984 [7) Gross Production [2] I t I I 3.845 5.909 95.871 308.887 433.410 598.214 649.504 781.536 864.778 888.387 19.25 '1. Inrcuon £21 I t I I 0.000 0.000 68.080 271.854 390.136 546.509 595.106 715.615 791.979 805.021 19.83 '1. Ne Production: t t I I 3,845 5.909 27.791 37.033 43.274 51.705 54.398 65.921 72.799 B3.36b 14.48 '1. CDNSU"PTION Field Operations I I I I 2.808 3 •. 856 24.444 29.231 33.763 39.6'97 41.607 51.921 58.210 68,315 15.20 '1. Vented and flared £21 I I I t 1.061 1.254 10.882 2.313 1.840 1.801 2.485 3.490 2.524 3.446 Used on Leases [21 I t t I 1. 747 2.602 13.562 18.82(; 23.559 28.967 29.642 37.864 44.837 51.048 Shrinka1e £21 I t t I 0.000 o.ooo 0.000 0.000 o.ooo 0.000 0.000 0.000 0.000 0.000 Other [ J t t t I 0.000 0.000 0.000 8.092 8.364 8.929 9.480 10.567 10.849 13.821 Sold £21 I t I I 1.o:n 2.054 3.347 7.802 9.512 12.007 12.m 14.000 14.589 15.051 11.57 '1. Po~ter 9eneration, Public [3] I t I t I t t t t I 0.315 0.404 0.482 0.485 Gas Ut1lities, Residential £31 t t t I I t I t I I 0.435 0.539 0.407 0.514 Refiners [4] I 0.560 1.939 2.465 3.268 1. 785 0.199 0.237 0.285 o. 3130 0.316 0.486 0.502 0.50b 8.39 '1. TAPS £51 o.ooo 0.000 o.ooo 0.000 0.000 0.000 l. 754 6.949 8.648 10.686 11.106 11.952 13.277 12.636 10.48 '1. Other Sales [6] 12.2311 0.269 1.394 0.616 0.579 0.941 0.619 0.619 10.0791 0.910 I Not iivailable. [1] Esti=ated fro• ~art-yearly reports of cited sources. I [2] Alaska Oil and as Conservation Co111issionf "Report of Sas Disposition,• 11onthly reports. w 1-' [3] BarroN Utilities and Electric Cooperative nc., personal coaaunication. I [4] Royalty reports fro• Union to Division of Oil and Sas, iteas Alaska Pipeline-Nikiski, Chevron Rental Sas and "etering. [5] Rolalty reports fro• ARCD to Division of Oil and 6as. [6] Ca culated difference bet~teen "Sold" and sua of listed "Sold" iteas. [7] Average annual groMth. SID Tbl: T5_3~ rev. 117/85 ROYALTY OIL AND GAS DATA BY FIELD FIELD LOCATION 8E6AN PRODUCTION OIINER OPERATOR AVERAGE "ONTHLY PRODUCTION AS IJF 1·9/84 CU"ULATlVE NET PRODUCTION AS DF 9/84 ESTI"ATED RESERVES AS OF 9/84 ESTI"ATED PERCENT OF FIELD DEPLETED AS OF 9/84 BELUGA RIVER Cook Inlet, onshore, •est side 1/68 A6EA, ARCO, Chevron, Shell Chevron OIL Bbl Bbl Bbl % Casinghead ROYALTY 12.51, Effective rate: 7.555% GAS "CF Gas lieU 1,568,438 "CF 175,561,305 "CF 763 1 884,062 I!CF 19 z PURCHASER Chugach Electric, ENSTAR /Bbl /"CF RIY: t 0.21033 /NCf ---------------------------LEASES State ADL: 17592, 17599 1 176581 21126 1 21127, 21128, 21129 Federal AD: 29656, 29657 COI!IfENTS APPENDIX A Until recently, Chugach Electric was the only current purchaser of this gas. Chugach uses this gas for power generation Mhich is delivered to the Anchorage earket. . Enstar has recently purchased Beluga River gas under contract froa Shell and just coapleted i pipeline fro1 the field through the l!at-Su Valley to Anchorage. . Due to the existence of several Federal leases, the state's effective royalty share is 7.5551. Royalty o•nership tas reallocated by changing the ONnership deter1ination fro• surface acreage to reservoir percentage. FIELD LOCATION BEGAN PRODUCTION ONNER OPERATOR AVERA&E "ONTHLY PRODUCTION AS OF 1-9184 CUI!ULATIYE NET PRODUCTION AS OF 9/84 ESTI~TED RESERVES AS OF 9/84 ESTI~ATED PERCENT OF FIELD DEPLETED AS OF 9/84 CANNERY LOOP Cook Inlet, onshore, east side Field delineation underway Union OIL Bbl Bbl Bbl ----------·----------------ROYALTY PURCHASER /Bbl LEASES State ADl: COI!"ENTS Shut-in gas field. Initial hydrocarbon equity oMnership calculations underway. &AS Casinghead &as Nell ltCF I!CF 1 /ltCF KCF KCF KCF /ltCF FIELD LOCATIIII BEiiM PRODUCTIGI DINER DUCK ISLAND I SA& DElTA CENDICOTT R£SERVIIIRI NOrth Slope, onshore/offshore Facilities design under~ay, prDductioo npected to begin in 1988. OPERATOR AVERA&£ liOIITHLY PROilt.ICTIOII AS OF 1~9184 CUIIULATIYE ftET PRODUCTION AS OF 9184 ESTIIIATED RESERVES AS OF 9184 ESTIIIATED PERCENT OF FIELD DEPlETED AS OF ll/84 ROYALTY PURCHASER SOHIO OIL Bbl Bbl Bbl /Bbl ---------------------------LEASES State ADL: COIIIIENTS Initial calculation of hydrocarbon ownership underway. Unit lffl expansion application 1ade in Deceeber, 1984. FIELD LOCATION BE&AN PRODUCTION OiliER OPERATOR AVERA&£ IIONTHLY PRODUCTION AS OF 1-9/84 CUIIULATIVE NET PRODUCTION AS OF 9/84 ESTiftATED RESERVES AS OF 9184 ESTIIIITED PERCEIIT OF FIB.D DEPlETO AS OF 9184 ROYALTY ·PURCHASER ---------------------------LEAS£5 State AIL: CIBIIIENTS EPPERSON KNOB UNIT AREA Cook Inlet, onshore, east side Exploration to begin in 1985 Alaska Crude Corporation Oil Bbl Bbl Bbl /Bbl BAS Casinghead 61! !fell IICF ltCF /IICF &AS Casinghead &as hll ltCF IICF IICF /II:F -33- IICF IICF /IICF IICF % lrll FIELD LIICATIOI BE6AM PRIIIHICTIIIM om OPERATOR AVERA&£ lllltTKLY PRODUCTIOI AS OF 1·9184 CURULATIVE NET PRODUCTION AS Of 9/84 ESTlftATED RESERVES AS OF 9/84 ESTlftATED PERCENT OF FIELD DEPLETED AS OF 9/84 FALLS CR£EK Cook Inlet, onshore, e1st side Shut-in l'lt~l Cht¥ron OIL Bltl Bbl Bbl -------------- ROYALTY PURCHASER LEASES Stlte ADL: CDIUIENTS Shut-in gas field. FIELD LOCATION /Bbl GRANITE POINT Cook Inlet, affshort 1 test side 12167 BAS Casinghead 6as llell JICF 0 ftCF IICF 181983 lltF IICF 13, ooo, 000 ftCF 0 '1. /IICF /IICF BEGAN PRODUCTION OIINER OPERATOR AIIDCD, ARCD, CheYran, Betty, llabil 1 Phillips, Superior, TI!XitD 1 Union AIIOCO, ARCO, Texaco, Union AYERA6E KONTHLY PRODUCTION AS OF 1-9/84 CUitULATJVE NET PRODUCTION AS OF 9/84 ESTiftATED RESERVES AS OF 9/84 ESTIMTED PEIICEIIT OF FIELD DEPLETED AS OF 9/84 ROYALTY OIL 285,255 BbJ '171 1101 561 Bbl 24,432,705 Bbl 80 t 12.5 t PURCHASER Tesoro RIK: S24.884 /Bbl ARCOt MOCD Platfant Uniont Casinghead 204,099 IICF 84,793,308 IICF 24, 163, 112 IICF 78 t /IICF RIV: t 0.111 RIV: t 0.10 RIV: I 0.10 t Still ataunt of casinghead gas sald to AIIOCO far use an platfara. ---------------------------LEASES State ADL: 17586 1 175871 17597 1 18742, 18761 1 18776, 35431 CDftiiENTS All royalty oil fro• this field is taken in kind and sold ta Tesoro. BAS Ills llell lfCf 1 /IICf &as fro• this field is casinghead gas and •as for1erly flared. DO&C Flaring Order 1104• 6/30/71, has prohibited flaring since 7/1/72 and this gas is no• recoYered and used locally. FIELD &IYIYR BAY UNIT AREA LOCATIOII North Sla~e, onshart/offshart BE&AII PROIIUCTIOI Field del1neatian under,ay OUMER OPERATOR Canoe a OIL 6415 Casinghead 61! ltll AVERAGE IIIJNTHL Y PRODUCTIOII Bbl IICF tiCF AS OF 1-9184 CUHULATIYE NET PRODUCTION Bbl IICF riCF AS OF 9/84 ESTIMTED RES£RVES 30,000,000 Bblt IICF ltCf AS OF 9/84 ESTIMTED PERCEJIT OF fiELD DEPLETED AS OF 9/84 1 1 Milliat Yan Dyke, personal tDitunitation, 10/10/84. ·--------------------------ROYALTY PURCHASER /Bbl /llCF IriS ---------------------------LEASES State ADI.: COHIIENTS Further eKplaration attivitie§ planned for 1985. FIELD HEfti SPRINGS UMIT AREA LOCATION Harth Slope, onshore BESAN PRODUCTION Exploration to begin in 1984 OiiNER OPERATOR ARCIJ OIL GAS Casinghead 611 lell AYERASE IIDNTHLY PRODUCTION Bbl t!CF IICF AS OF 1-9/84 CUNULATIVE MET PRODUCTION Bbl ltCF IICf AS OF 'f/84 ESTIMATED RESERVES Bbl IICF II:F AS Of 9/84 ESTIMTED PERCm OF FIELD DEPLETED AS OF 9/84 1 1 ---------------ROYALTY PURCHASER /Bbl /llCF /IICF ---------------------------LEASES State Aot: COKHEIITS Unit agreeaent approved in 1984. -35- FIELD. IVAI RIVER LOCATION Coat Inlet, onshore, •est side BEGAII PRODUCTIIII Shut·in 1966 1 suspended DIINER OPERATOR Chevron OIL &AS Casinghead &as IIIII AVERA&£ ftlltTIILY PRODUCTION Bbl IICF IEF AS OF l-9/84 CUKULATIVE NET PRODUCTION Bbl ftCF OIICF AS OF 9/84 ESTII'IATED RESERVES Bbl ftCF 26,000,000 IICF AS OF 9/84 ESTIMTED PERCENT OF FIELD DEPLETED AS OF 9/84 X X 0'1 ---------------------------ROYALTY PURCHASER /Bbl /IICF /1117 ---------------------------LEASES Stite ADL: CDftftENTS Shut-in gas field. FIELD KATALLA LOCATION &ulf of Alaska, onshore BEGAN PRODUCTION Abandoned 1934 ONNER OPERATOR Fee land OIL GAS Casinghead &as llell AVERAGE ftONTHLY PRODUCTION· 0 Bbl IICF ftCF AS OF 1-9/84 CUftULATIVE NET PRODUCTION 154,000 Bbl IICF IICf' AS OF 9/84 ESTiftATED RESERVES Hot reported Bbl ftCF IICF AS OF 9/84 ESTiftATED PERCENT OF FIELD DEPLETED AS OF 9/84 ________________ ... ________ ROYALTY PURCHASER /Bbl /ftCF /IICF -------LEASES State ADI.~ connEHTS Alaska Crude Corporation beginning exploration again in 1985. -36- FIB.D LOCATIIIII BE&Aif PROIIOCTIIII ONNER OPERATOR AVERA&E IIIIITII. Y PRODUCTIIIII AS OF J-9/84 CUftULATIVE NET PRODUCTIOI AS OF 9/84 ESTiftATED RESERVES AS OF 9/84 ESTIMTED PERCENT OF FIELD DEPLETED AS OF 9/84 KAVIIC Narth Slope, anshan Susp!llded ARCO OIL Bbl Bbl Bbl ---------------------------ROYALTY PURCHASER /Bbl LEASES Stite ADL: COifftEHTS Shut-in gas field. FIELD KENAI LOCATION BEGAN PRODUCTION OllffER Cook Inlet, onshore, east side . 1/62 . . OPERATOR AVERAGE ftOHTHLY·PRODUCTION AS OF J-9/84 CUftULATIYE NET PRODUCTION AS OF 9/84 ESTIKATEO RESERVES AS OF 9/84 ESTiftATED PERCENT OF FIELD DEPLETED AS OF 9/84 1 Natural gas liquids. ARCO, Chevron, lfarathon, Union On ian OIL Bbl 11,877 Bblt Bbl &AS Casinghead &u lbll ltCF IICF ftCF IICF IICF z /ltCF /IICF &AS Casinghead Saslfell IICF 9,076,597 Kef ftCF 1,510,682,825 IICF ftCF 763,310,628 IICf z 66 z ROYALTY PURCHASER 12.51, Effective rate: Kenai, 2.068791; Kenai Deep, 0.01 Alaska Pipeline /Bbl Chevron /ftCF RIY: t 0.605 /ICF RIV: t 0.605 City af Kenai lfarathan LH6 Rental gas CS•ansan River ail field! Union Unian--thevron exchange Keighted average: LEASES State ADL: 00593, 00594, 00588, 02411, 02497, 308223, 324598 Federal AD: 28047, 28055, 28056, 28103, 28140, 28142, 28143 CDifftENTS RIV: S 0.29 RIV: t 2.02 RIV: t 0.18 RIV: t 0.53 RIV: t 0.605 • 0.526 The Kenai Unit provides aast of the gas sales in the Coat Inlet area. Estiaated Alaska state royaltr gas sales •ere approxiaately 195,000 ftCF as of 1982. The state does not receive the full 12.5% ro~alty share because Df the predaainance of Federal lea!es in the unit and the recent conveyance of land to Cook Inlet Region Inc. The price the state receved frat its royalty share results frat prices paid under existing contracts between the lessees and their purchasers. -37- FIELD KUPARIIK LOCATION North Slape, onshore B£6AN PRODUCTION 12/81 DlfJIER ARCO, BP, Chevron, Exxon, llollil, Philli!ls, Saltio, Unian OPERATOR ARCO .· OIL &AS Cuinghead &as M.ll AVERA&£ IIDITHLY PRODUCTIOI AS OF 1-9/84 l, 498,390 Bbl m, 9:u JK:F IICF CUI!UlATIVE NET PRODUCTIDI 1041 868 1 433 Bbl 16,508,372 IICF IICF AS OF 9/84 ESTIIfATED RESERVES 11 040,000,000 Bblt 220,000,000 ftCFt JH:F AS OF 9/84 ESTIIIATED PERCENT OF FIELD DEPLETED AS OF 9/84 6 'E 7 'E t Millia1 Van Dyke, persanal COIIanicatian, 10/10/84. -----. ---------ROYALTY 12. ~ 'E PURCHAS£R All CHillers RIV: 116.83643 18blt RIV: 12.992356 llftF 1 leighted average, with field costs. -------·.------------------LEASES State ADL: 25512 1 25513, 25519, 25520 1 25521, 25522, 25523, 25531,.25547, 25548 25569, 25570, 25571, 25585 25586, 25587, 25588, 25589, 25590, 25603 CDIIIIENTS 25604 25605 25628 25630 25631 25632 2!1633 25634 25635 256361 256371 256381 256 25640' 25641' 256421 25643 1 256441 25645 25646 1 25647 1 2564&! 25649 25650 1 25651' 25652 1 25653 1 25654 1 25655 25656: 25~ 25658, 25659: 25660~ 25661~ 25664: 25665: 25666~ 25661 25668 Unit Area expansion approved in 1984. FIELD. LOCATION BEGAN PRODUCTION OWNER OPERATOR AVERAGE IIDMTHLY PRODUCTJQI AS OF 1-9/84 CUIIULATIVE NET PRDDUCTIDI AS OF 9184 ESTiftATED RESERVES AS OF 9/84 ESTIIIATED PERCENT DF FIELD DEPLETED AS OF 9/84 ROYALTY PURCHASER LEASES State ADL: CIJIIIIENTS L£MIS RIVER Coot Inlet, ansltare, west side 1984 Cities Service OIL RIY: 12.51 Bbl Bill Bbl 1 /Bbl Short tert gas sates to Enst1r beglft in 1984. GAS Casinghead Gu Well IICF 0 IICF IICF 53,295 IICF 22,000,000 IICF 1 0 z /IICF IIICF -38- FIELD LOCATliiM LISBURNE RESERVOIR BESAI PRODUCTIIII DIINER North Slope, onshare/offshor.e Field delineation and facilities design under.ay, productlon·e•pected to b@Vin in 1986-87. ARCO OPERATOR OIL AVERA&£ IIIIITHlY PRODUCTIOI 35,140 Bbl AS OF 1-9/84 . CUftULATIVE MET. PRODUCTION 613,152 Bblt AS OF 9/84 ESTIItATED RESERVES 399,683,740 Bbltt AS OF 9/84 ESTiftATED PERCENT OF FIELD DEPLETED AS OF 'f/84 0% 1 Includes 28,897 Bbl N&L. tt Milliaa Van Dyke, personal CD11unication, 10/10/84. ROYALTY PURCHASER LEASES State ADL: CIIIIIIENTS FIELD LOCATION 12.51 /Bbl IICARTHUR RIVER Cook Inlet offshore, west side 12/69. Casinghead 36,178 IICF 856,938 IICF 1,099,674,399 IICFt 0 1 /IICF BAS BEGAN PRODUCTION OMHER OPERATOR AIIOCD, ARCD, Chevron, Getty, narathon. Philli,s, Union Union OIL GAS Casinghead AVERAGE IIDHTHLY PRODUCTION 1,030,248 Bbl 501 1 795 IICFtt AS OF 1-'f/84 CUIIULATIVE.HET PRODUCTION 504,364,975 Bblt 180,731,696 IICFtt AS OF 9/84 ESTit!ATED RESERVES 64,727,768 Bbl 21,483,845 IICF AS OF 9/84 ESTIIfATED PERCENT Of FIELD DEPlETED AS OF 'f/84 89 1 8'f 1 1 Includes 8,112 1602 Bbl N&L. tt Includes tank vapors. ---------------------------ROYALTY 12.5 1 PURCHASER Tesoro RIK: $28.04 /Bbl /IICF _.,. _______ ,. _______ Gu lieU IEF IICF /IICF Sis Well 753,798 IICF 105 1347,362 IICF 53,215,816 IICF 66 1 /IICF LEASES Stat! ADL: 17519, 17594 1 176029 18716 1 18729, 18730, 18758, 18772, 18777, 21068 CDMENTS All royalty ail fr01 this field is taken in kind and sold to Tesoro. Gas fro• this field is casinghead gas and was for1erly flared. DO&C Fl~ring Order 1104, 6/30/71, has prohibited flaring since 7/1/72 and this gas is no• recovered and used locally. -39- FIELD LOCATION BEGAN PRODUCTIDM OIINER OPERATOR AVERA&£ lllllmiLY PRODUCTION AS OF 1·9184 CUlllt.ATIVE NET PRODUCTION AS OF 9/84 ESTiftATED RESERVES AS OF 9/84 ESTlltATED PERCENT OF FIELD DEPLETED AS OF 9184 ROYALTY PURCHASER AKOCO NICIII..AI CREEK Coat Inlet, onshore-offshore, west side 10/68, nat shut-in Supartar, Texaco Teuco DlL Bbl Sbl Bbl 1 12.5 1 /Bbl Casinghead LEASES Stat~ AOL: 17585, 17598 1 63279 Federal AD: 34161 COIIIIEIITS &AS IICF IICF Gas lell OIICF !1 062,055 IICF 3,000,000 IICF 26 I /IICF RIY: I 0.15 /lltF Gas fro1 this Slill field, when produced, is used only by platfor• and shore production facilitits. At present there is no production and no prospective purchaser far the state's royalty share. FIELD LOCATION BEGAN PRODUCTION ONHER OPERATOR AYERA6E IIONTHLY PRODUCTION AS OF 1-9/84 CUIIULATIVE NET PRODUCTION AS OF 9/84 ESTIIIATED RESERVES AS OF 9/84 ESTtltATED PERCENT OF FIELD DEPLETED AS OF 9/84 ----------------------ROYALTY PURCHASER Alaska Pipeline Phillips ---------------------------LEASES State ADL: CD!IItENTS NORTH CODK INLET Coat Inlet, affshare, aid-channel 3/69 P~illips Phillips OIL Bbl Bbl Bbl 1 12.5 I /Bbl 17589, 17590, 19740, 18741, 37831 Casinghead 6AS IICF IICF ltCF /tiCF Bas ilell 3,814,191 ftCF 824,672,783 IICF 45 1 RlY: f2.3405 /IICF Gas froa this field is primarily delivered to the Phillips LNS plant and subsequently sold in Japan. -40- FIELD LOCATION BEGAN PRODUCTIOI DINER OPERATOR AYERA6E "ONTHLY PRODUCTIOI AS OF 1-9/84 CUIIULATIVE NET PRODUCTION AS OF 9/84 ESTiftATED RESERVES AS OF 9/84 ESTIIIATED PERCENT OF FIELD DEPLETED AS OF 9/84 RIDDLE GROUND SHOAL Coat Inlet, offshore, east side 9167 AftDCD, ARCD1 Chevron, Setty, Phillips, Shell •o, Slteh OIL 273,544 Bbl 143,180,432 IJJil 12,539,105 Bbl Casinghead 185 1009 IICF 9,334,920 IICF 88 l --------------------------- 92 l 12.5 l RIK: t28.17 /Bbl ROYALTY PURCHASER Tesoro /IICF LEASES State ADL: 17595, 18744, 18746, 18754, 18756 COJIIIENTS All royalty oil productd frat this field is taien in kind and sold ta Tesoro. Recent increases in gas prices aay encourage a reevaluation of this gas. SAS &as Well 27,835 IICF 586,476 IICF Not reported IICF N/A 1 /IICF &as frot this field is casinghead gas and •as forterly flared. DD&C Flaring Order 1104, 6/30/71, has prohibited flaring since 7/1/72 and this gas is no• recovered and used locally. FIELD LOCATION IIILNE POINT BESAN PRODUCTION OIINER OPERATOR North Sl~e, onshore Field del1neation and facilities de5ign underway, production expected to. begin in 1986. Canoco AYERA&E ftOHTHLY PRODUCTION AS OF ·1-9/84 CUftULATIYE NET PRODUCTION AS Of 9/84 ESTiftATED RESERVES AS OF 9/84 ESTIIIATED PERCENT OF FIELD DEPLETED AS OF 9/84 OIL Bbl Bbl 60,000,000 Bblt t Milliat Van Dyke, personal coaaunication, 10/10/84. -----·---------------------ROYALTY Estitated effective rate, 161. PURCHASER /Bbl LEASES State ADL: COIIIIENTS Unit area expansion approved during 1983. GAS Casinghead Gas llell IICF IICF IICF IICF 1 IIICF /IICF -41- FIELD NORTM FORt: LOCATION Coot Inlet, onshore, east side BE&AN PRODUCTION Shut-in 1965 OIIHER OPERATOR Chevron OIL 6AS Casinghead Sasllrll AVERAGE IIDNTHLY PRODUCTION llfll IICF OIICF AS OF 1-9/84 CUIIULATIVE NET PRODUCTION Bbl AS OF 9/84 IICF 104,595 IICF ESTI~TED RESERVES Bbl AS OF 9/84 IICF 12,000,000 IICF ESTIIIATED PERCENT 6F FIELD DEPLETED AS OF 9/84 % I 1 ---------------------------ROYALTY PURCHASER /Bill mF /IICF ---------------------------LEASES State AOL: cal'lmTs Shut-in gas field. FIELD NORTH !IlDDLE &ROUND SHOAL LOCATION Cook Inlet, offshore, tid-channel BESAN PRODUCTION No produttlon, abandoned 1975 ONHER OPERATOR OIL SAS Casinghead &as llell AVERAGE IIONTHLY PRODUCTION Bbl IICF IICF AS OF 1-9/84 CUIIULATIYE NET PRODUCTION Bbl IICF IICF AS OF 9/84 ESTIIIATED RESERVES Bbl IICF IICF AS OF 9/84 ESTIIIATED PERCENT OF FIELD DEPLETED AS OF 9/84 'I ---------------------------tDYALTY URCHASER /Bbl /IICF /IICF --------------------------EASES State ADL: DIIIIENTS -42- FIELD LOCATION BE&AN PRODUCTIOI OIINER OPERATOR PRUDHOE BAY -SADLEROCHIT RESERVOIR North Slape, onshore 10/69 A11rada-Hess, ARCO( BP, Chevron, Exxon, Setty, LLlE, ftarathan, Habil, Petra-Lewis, Phill1ps, SDHIO ARCD, Sohio . OIL BAS Casinghead &u llell AVERAGE HONTHLY PRODUCTION 46 1 810 1092 8bl AS OF 1-9/8. b1 209,513 II£F CUHUUTIVE NET PRODUCHDII 31634 1 014,931 Bbl AS OF 9/84 402 1 116,096 ftCF ESTIHATED RESERVES 6,343,000,000 8blt 29,000 1 000,000 ftCFt IICF AS OF 9/84 ESTIMTED PERCENT Of FiaD DEPLETED AS OF 9/84 36 I 1 1 t Milliam Van Dyke, personal cotDUnication, 10/10/84. ------------ ROYALTY 12.5 Z, Meighted average: S18.09916 PURCHASER Hapco-&VEAt RIK: .213334 of Royalty /HCF Tesorot RlK: .21208 of Royalty /IICF Chevront RIK: .096 of Royalty t Ne• contracts effective 4/1/85. LEASES CDH"ENTS State ADL: 2823Dt 28239, 28240 1 28241, 28244' 28245, 28246, 28257 28258 28260 28260, 28261, 28262, 28263, 28264, 28265, 28275, 28276~ 28277: 28278 28279, 28280, 28281, 28282, 28283, 28284, 28285, 28286, 28287, 28288 28289 28290 28299 28300 28301 28302 28303, 28304, 28305 28306 28307: 28308: 28309: 28310: 28311: 28312: 28313, 28314, 28315: 28316 28320, 28321, 28322, 28323, 28324, 28325, 28326, 28327, 28328, 28329 28330, 28331, 28332, 28333, 28334, 28335, 28339, 28343, 28344, 28345 28346 28349 34628 34629 34630, 34631 34632 47446 47447 47448 47449: 47450: 47451: 47452: 47453, 47454: 47469: 47471: 47472: 47475 47476 The state's roialty share of oil ~roduced is 12.511 •ith 14.91 of this share presently bein; taken in kind and so d to ·North Pole Refinery and &olden Valley Electric Assn. An additional 35.5178% of the state's share is taken in kind and sold to Tesoro. The re1ainder is taken in value. Additional royalty ail sales in 1984 are cantelplited to be taken in value. S1all a1ounts of produced gas are presently sold to the operator of the Trans-Alaska Pipeline. The state is receiving royalty in value •ith the gas price being set bl the o.ners of the gas. There presently is no ather lirket. The state's royalty share of gas sa es is 12.51. Unit Area e1pansion approved 1984 1 Mith additional develop1ent •ark continuing • ..,.43- FIELD. PRUDHOE BAY -SA& RIVER RESERVOIR LDCATIOII BEBAN PRODUCTION OIINER OPERATOR OIL AVERA&E "ONTHLY PRODUCTION Bbl AS OF 1-9/84 CU~LATIVE NET PRODUCTION Bbl AS OF 9/84 ESTIKATED RESERVES AS OF 9/84 130,000,000 Bblt ESTiftATED PERCENT Of FIELD DEPLETED AS OF 9/84 X t Millia1 Van Dyke, personal co11unicatian, 10/10/84. ROYALTY PURCHASER LEASES State ADL: COIIIIENTS FIELD LOCATION BEBAN PRODUCTION OIINER OPERATOR /Bbl POINT THOIISOH UNIT AREA ·North Slape, onshore/offshore Shut-in . EXXON OIL AVERA&£ "ONTHLY PRODUCTION Bbl AS OF 1-9/84 CU"ULATIYE NET PRODUCTION Bbl AS OF 9/84 ESTI"ATED RESERVES 400,000,000 Bblt AS OF 9/84 ESTIIIATED PERCENT Of FIELD DEPLETED AS OF 9/84 t Millia1 Van Dyke, personal co••unicatian, 10/10/84. ROYALTY PURCHASER LEASES State ADL: CO""ENTS /Bbi Casinghead IICF "CF "CF I Casinghead IICF IICF 5,000,000,000 IICFt /IICF BAS Bas hll ltCf "CF "CF /IICF &AS Su lieU "CF IICF /IICF Unit Area expansion approved in 1984. llarket analysis underMay to deter1ine develapaent potential. -44- FIELD LOCATIOI BE&AM PRODIETIIII ONNER OPERATOR REDilUIT SIIIJAL Coal Inlet. offshore, lid-channel Abandoned OIL AVERASE ftONTHLY PROIUCTIOI 0 Bbl AS OF 1·9/84 CUftULATIVE NET PRODUCTION 1,596 Bill AS OF 9/84 Casinghead 0 f!CF 4S6 IICF ESTlf!ATED RESERVES Not reported Bill AS OF 9/84 tlot r!ported IICF ESTIItATED PERCENT IF FIELD DEPLETED AS Of 9/84 N/A 1 ROYALTY PURCHAS£1l LEASES COIIIIENTS /Bbl State ADL: FIELD ~~~~~:ooucnDN SOUTH JICARTHUR RIVER UIIIT AREA Cook Inlet, offshore Further exploration pending OWNER OPERATOR Jlallil IVERA&E JIDNTHLY PRODUCTION · AS OF 1·9184 CUJIULATIVE NET PRODUCTION AS OF 9/84 . ESTIJIATED RESERVES AS IF '1/84. ESTif!ATED PERCENT Of FIELD DEPLETED AS OF 9/84 ROYALTY PURCHASER ·-----------LEASES Slite ADL: COIIIIENTS OIL Unit agreeaent likely to ter1inate in 1985. Bill Bbl Bbl /Bbl N/A 1 /IICF Casinghead IICF 1 /IICF -45- &AS 611 Ifill fiCF IICF I lrrtl 615 lltll IICF /IICF FIELD LCCATHIN BEGAN PRODUCTION OltNER OPERATOR AVERAGE "ONTHLY PRODUCTION AS OF 1-9/84 CU~LATIYE NET PRODUCTION AS OF 9/84 ESTIIIATED RESERVES AS OF 9/84 ESTIKATED PERCENT OF FIELD DEPLETED AS OF 9/84 ROYALTY , STERLING Coot Inlet, onshore, east side 5/62 Karatbon, Union Union OIL Bbl Bbl Bbl t Casinghead PURCHASER Sport Lake Greenhouse 12.5%, Effective rate, 1.554611 /Bbl lEASES State ADL: 02497 1 320912, 324599 CDI!I!ENTS BAS Bas Well 1,116 KCf 2,066,408 IICF 22, 989,958 IICF B% Since Federal and Cook Inlet Region Inc. leases are involved, the state's rovalty share is approxi1ately 1.61. The only gas sold fro1 this field is consu1ed locally. · · There is no gas pipeline currently available to deliver this gas fro• this field to any other 1artet. Because of l11ited reserves, there is no current prospect of additional 1artets. FIELD LOCATION BEGAN PRODUCTION OliNER OPERATOR AVERA&E "ONTHLY PRODUCTION AS OF 1-9/84 CUIIULATlVE NET PRODUCTION AS OF 9/84 ESTlftATED RESERVES AS OF 9/84 ESTiftATED PERCENT OF FIELD DEPLETED AS OF 9/84 ROYALTY PURCHASER LEASES State ADL: CDIUIENTS Shut-in gas field. STUIIP LAKE UNIT AREA Cool Inlet, onshore, west side Suspended Chevron OIL Bbl Bbl Bbl /Bbl Casinghead -46- &AS Gas llell ftCF IICF lftf IICF /fief /IICF FJELD lOCATION BEGAN PRODUCTION OllltER OPERATOR AVERAGE "DNTHLY PRODUCTION AS OF H/84 CUIIULATIVE NET PRODUCTION AS OF 9/84 ESTIMATED RESERVES AS OF 9/84 ESTIMATED PERCENT OF FIELD DEPLETED AS OF 9/84 ROYALTY PURCHASER LEASES State ADL: CO"IIEHTS Shut-in gas field. FIELD LOCATION BEGAN PRODUCTION OIINER OPERATOR AVERAGE IIDNTHlY PRODUCTION AS OF 1-9/84 CUMULATIVE NET PRODUCTION AS OF 9/84 ESTiftATED RESERVES AS OF 9/84 ESTI"ATED PERCENT OF FIELD DEPLETED AS OF 9/84 THEODORE RIVER !PRETTY CREEK UNIT AREAJ Cook Inlet, onshore, •est side Suspended Chevron OIL Bbl Bbl Bbl /Bbl TRADING BAY Cook Inlet, offshore, Nest side 12/67 ftarathon, Union Union OIL 51,836 Bbl B5,793 1Si6 Bblf 21 533 1 476 Bbl 91 I Casinghead ftCF ftCF /IICF Casinghead 75,832 ftCF 57,500 1 060 KCFH 2,317 1 509 ft£F 96 X 1 includes 3461543 Bbl. NSL. It Includes tan• vapors. ROYALTY 12.5 X PURCHASER Tesoro RIIC: 126.43 /Bbl tt /lltF tt Meighted average. LEASES State ADL: 18731 tOIIIIENTS All royalty oil frot this field is taken in kind and sold to Tesoro. &AS &AS Gn llell ftCF IICF z /IICF Gas Well 55,991 "CF 1,841 1 467 lltF 2'f,4'f6,081 lltf 6 1 /lltF Gas fro1 this field is casinghead gas and for1erly was flared. DO&C Flaring Order 1104, 6/30/71, has prOhibited flaring since 7/1/72, and this gas is no• recovered and used locally. -47- NEST FORK FIELD LOCATION Cook Inlet, onshore,east side BE6AN PRODUCTION ONNER OPERATOR AVERA6E ftONTHLY PRODUCTION AS OF 1-9/84 CU"ULATIVE NET PRODUCTION AS OF 9/84 ESTiftATED RESERVES AS OF 9/84 ESTI"ATED PERCENT OF FIELD DEPLETED AS OF 9/84 ---------------------------ROYALTY PURCHASER ---------------------------LEASES State ADL: Federal AO: CO""ENTS Shut-in gas field. FIELD OIL Bbl Bbl Bbl /Bbl NEST KIKKELSEN LOCATION North Slopei onshore/offshore BEGAN PRODUCTION Further exp oration pending OliNER OPERATOR ARCO, Shell OIL AI/ERASE I!ONTHLV PRODUCTION· Bbl AS OF H/94 CUHULATIVE NET PRODUCTION Bbl AS OF 9/84 ESTIIIATED RESERVES Bbl AS OF 9/84 ESTiftATED PERCENT OF FIELD DEPLETED AS OF 9/84 I ---------------------------ROYALTY PURCHASER iBbl ---------------------------LEASES State ADL: COI'IIIENTS Unit likely to tertinate in 1985. 6AS Casinghead Sas llell ftCF 3,340 "CF "CF 1,511,984 "CF "CF 5,969 1 943 ftCF 20 I /ftCF /"CF GAS Casinghead Sas Nell "CF I!CF liEF ftCF HCf HCF I iHCF /ftCF -48- FIELD LOCATION BEGAN PRODUCTION OIINER OPERATOR WEST SAK· RESERVOIR Harth Slape, onshore Pilat production underlay ARCD; Canota OIL AVERAGE IIOITHLY PRODUCTION Bbl AS OF 1-9184 CUIIULATIVE NET PRODUCTIDK . Bbl AS OF 9/84 ESTUIATED RESERVES ~. 000 1 000 Bbl AS OF 9/84 ESTIMTED PERCENT OF FIELD DEPLETED AS OF 9/84 ROYALTY PURCHASER LEASES State·ADL: COIIIIENTS /Bbl Casinghead Reservoir delineation and engineering/geological studies continuing. SID Tbl: Apdxa, rev: 1/8/85 -49- &AS ·aas Well IICF IICF IICF IICF IICF /IICF /IICF DEMAND PROJECTION METIIJDOLOGY APPENDIX B Introduction Demand for oil and gas is best calculated if divided into use categories because of similarity in the factors affecting the level and growth rate of demand by use. In addition, oil and gas often compete with one another in a market for a particular use such as space heating or electricity generation. The use categories in this study are transportation, electricity, space heat (including cooking, water heating, and clothes drying), and industrial. A model called ENDMOD (ENergy Demand MODel) has been constructed for calculating future energy demands in Alaska. · The factors most important in projecting future demand will vary by use cate- gory. In general, the most important are population (or households) and rel- ative fuel prices. The household is the basic consuming unit for the reili- dential sector and is a good proxy for demand in the commercial sector. In the industrial sector, relative fuel prices are the primary demand deter- minate; while in the residential and commercial sectors, fuel prices are more important in determining the type of fuel used. Transportation Use of Liquid Petroleum Introduction The method of projecting transportation fuel use is with per capita consump- tion coe.ffic:ient s. Gasoline a. Highway use (taxable and exempt) is the largest category of gasoline con- sumption in Alaska. Historically, demand is related to population, per- sonal income, and the fuel efficiency of the automobile stock. In Alaska, growth in the first two factors will tend to offset the effect of in- creased fuel efficiency in future years resulting in aggregate growth in use of this fuel. Nationally, per capita consumption of gasoline has fallen in recent years. We assume a continuation of this per capita trend for Alaska. In Alaska, per capita consumption of highway gas peaked in 1975 at 502 gallons per capita and declined to 383 gallons per person in 1983. The estimated consumption for 1984 is 418 gallons per person. Demand is projected using a per capita coefficient which declines one percent annually from the previous year. The initial value of 411 gallons per capita is the mean of per capita consumption of 1981 through 1984. b. Aviation gasoline .(taxable and exempt) use bas, in the past decade, been roughly 10 percent as large as highway gasoline use. Between 1971 and 1982, consumption of aviation gas per capita varied between 35 and 43 gallons. In 1982, consumption fell to 36 gallons· from tl'ie peak of 43 gallons in 1981 and to 30 gallons per capita in 1983. Consumption -so- increased in 1984 to an estimated 33 gallons per capita. The initial value for aviation gas consumption is the 4-year mean of 35 gallons per capita. c. Marine gasoline (taxable and exempt) use has, in the past decade, been roughly 50 percent of the aviation gasoline consumption level with an apparently slightly slower growth rate. We assume a strong income elas- ticity of demand will result in maintenance of the current per-capita-use coefficient in future years. Consumption in 1983 was 17 gallons per capita. 'Ihe initial value used to project consumption is the 4-year mean of 17.5 gallons per capita. Jet Fuel Jet fuel: consumption consists of domestic commercial operations, international commercial operations, and military operations. Domestic commercial opera- tions is a function of the Alaskan population .and economy and as such has grown rapidly in per capita terms historically (taxable). International com- mercial operations are a function of world economic and political conditions as well as aviation technology. Military operations are broadly a function, albeit a different one, of the same factors. These two latter categories cannot be separately identified in the historical data, but their combined total has shown relatively modest, although cyclical, growth since the early 1970s. The sharp decrease in reported exempt aviation fuel consumption (and a corresponding increase in taxable jet fuel consumption) in 1982 is probably an. error. We project domestic commercial consumption separately from international com- mercial and military. We asstime that the taxable jet fuel category is prima- rily domestic commercial consumption and that the exempt jet fuel category includes international commercial and military consumption. The coefficient relating consumption to population for domestic commercial aviation has increased from 153 gallons per capita in 19 71 to 350 in 1981 and 575 in 1984. ('!his excludes the reporting error of 1982.) The initial value for projecting the civilian domestic jet fuel is 525 gallons per capita. We assume future growth will exceed population but at a slower rate than historically because of increased efficiency of the capital stock. The coef- ficient grows by 3 percent annually. International commercial and military consumption of jet fuel is the only transportation fuel not projected on a per capita basis. While variation in international commercial and military consumption is difficult to project, growth during the preceding decade approximated 1 percent per annum. We use this figure to project future growth with 1984 consumption of 260 million gallons as the initial value. -51- Diesel The categories used to report diesel fuel sales in Department of Revenue tax records have changed at least twice since 1979, making use of this source of data for projecting highway diesel consumption (or any type of consumption) difficult. Future growth in consumption is projected at the per capita use rate of 565 gallons. While the most recent reporting system provides a breakout ·of nontransportation sales in the "exempt other diesel" category, the estimates of highway diesel for earlier years requires the assumption that the magnitude of nontransportation diesel sales is small in the "exempt highway" and later "exempt other" categories. Additionally, we assume that the old "off-highway category" is pr,imarily nontransportation use. The per capita consumption of highway diesel fuel has grown steadily since 1978, when it reached a post-pipeline construction low. Future growth in con- sumption is projected, based upon the 3-year mean for 1982-1984. Marine diesel use has increased. extremely rapidly since 1981. The source of this· growth is impossible to determine from the data. We assume a constant per capita level of consumption of 250 gallons in future years. Regional Allocation Regional allocation of transportation fuels is made using the 1983 allocations of historical consumption as adjusted by projected shifts in regional popula- tion. Electric Utility Use of Liquid Fuels and Natural Gas Introduction Electric utility use of oil and gas is a derived demand based upon the demand for electricity and the methods used to generate it. We project this use of liquid fuels and natural gas by first estimating electricity demand for space heating and nonspace heating uses, then determining the proportion generated by fuel oil and natural gas, and, finally, determining demand based upon the efficiency of generation (heat rate). Since the electricity generation alter- natives vary by region in Alaska, we project fuel use by three major regions of the state: Railbelt, Southeast, and the rest of the state. Railbelt a. Consumption of Electricity The total electricity demand is split into the demand for residential space heat and for all other uses. The space heating consumption rates are based upon the weighted average of electricity consumption for space heat by housing -52- type as reported in the 1983 version of the Railbelt Electricity Demand (RED) model (Battelle Northwest Laboratories, June 1983). Consumption per household grows over the projection period due to increased electricity consumption for space beat in the new additions to the housing stock. 'l'he number of households using electric space heat depends upon the total number of households and the proportion of housing units which use electric space heat. Two factors are likely to influence the current proportion of households using electric space heat: (1) the extension of the gas utility into the Matanuska Valley and (2) the completion of the electric intertie between Anchorage and Fairbanks. The former will result in a portion of existing structures converting to natural gas from electricity for space heating. this will slow the growth rate of electricity use but increase the use of utility gas. The second factor may alter the relative price of elec- tricity in both Anchorage and Fairbanks relative to natural gas and fuel oil, thus causing some households, especially in Fairbanks, to switch from fuel oil to electric space heat. We assume the gas utility will continue to extend their market into the Matanuska Valley and aggressively market their gas for space heating. Market penetration began in 1984, and during the next ten years, the electric space heating market in the Matanuska Valley will fall to half its current share. We assume the completion of the Anchorage-Fairbanks intertie does not signifi- cantly alter the price of electricity faced by consumers in either location. In particular, there is no shift towards electric space heating in Fairbanks as a result of the tie-in to the inexpensive gas-fired electricity from Anchorage. The per-household demand for electricity net of residential space heating uses is based upon historical consumption for 1980-1983 and the projected growth in consumption as reported by Battelle in the RED model documentation. This includes both residential and commercial consumption. b. Mode Split Except as noted below, future additions to capacity within the projection period are all gas-fired turbines. Incremental generation in Anchorage is entirely natural gas. Incremental generation in Fairbanks will depend upon the cheaper of the cost of purchased electricity from Anchorage generated by natural gas and the marginal cost of locally produced electricity generated by fuel oil. We assume electricity moves in both directions in the line at dif- ferent times. Fairbanks excess capacity provides reserves to Anchorage, and cheap Anchorage generation provides off.,eak electricity to Fairbanks. Incre- mental generation in Fairbanks comes from Anchorage-produced electricity. The following assumptions specifically determine mode split: -53- 1. Coal-fired generation in Fairbanks remains constant at 354 thousand MWH annually. 2. Existing (Eklutna and Cooper Lake) hydroelectric facilities continue to provide railbelt power. 3. Fuel oil generation in Fairbanks declines 50 percent as a result of the intertie. 4. Solomon Gulch provides a firm annual average production of 54.6 thousand MWH annually. 5. Bradley Lake comes on line in 1993 and produces 330 thousand MWH annually. this backs out 4.4 billion cubic ·feet of natural gas annually. Heat rates are projected to remain at current levels. Southeast a. Consumption The growth rate in consumption per capita in Southeast is assumed to be the same rate as in the railbelt. lbese growth rates are applied to 1983 per capita consumption of ·a, 000 kwh per capita. The advent of less expensive electricity provided by hydroelectric power may cause electric space heating demand to grow and accelerate that growth rate. We assume this effect is insignificant. b. Mode Split As recently completed hydroelectric projects are brought on line, they will back out the use of fuel oil in electricity generation in those locations linked to the hydro power. the consumption of electricity in these communi- ties is estimated using the proportion of Southeast Alaska electricity con- sumption used by these communities in 1983. Rest-of-State Growth in per capita electricity demand in the rest of the state is assumed to occur at twice the rate projected for the railbelt. These growth rates are applied to 1983 per capita consumption rates of 3,900 kwh per capita. With the exception of Barrow, this region currently relies on fuel oil for electricity generation. This dependence is projected to continue into the future with the exception of Kodiak, which will have hydropower available in 1985 when the Terror Lake project is completed. This will provide 13 7 thousand MWH of firm annua 1 energy. -54- Space Heating Use of Liquid Fuels and Natural Gasl Introduction In the Anchorage area, natural gas is. the most economical fuel for space heating. Elsewhere fuel oil.is least expensiv~ except where electricity gen- erated by natural gas is available. In projecting future demands, we use dif- ferent procedures for gas and fuel oil because of differences in data avail- ability. Natural gas is based upon a projection of the current level of con- sumption. Fuel oil demand is estimated based upon the proportion of the pop- ulation assumed to heat with fuel oil and estimates of mean household fuel oil consumption. This. approach is pecessitated because there is no reliable direct estimate of current fuel oil consumption for space heating. Rail belt Natural gas for space heating (and a small amount of related uses for gas purchased from utilities) is projected to grow as a function of population. Growth historically has occurred at a rate in excess of population due to gas retrofitting and expansion of the commercia 1 s'ector. This trend will moderate in the future, and growth is projected to exceed population by two percent annually. In addition, a new gas market has opened in the Matanuska Valley. We estimate that by 1995, one-half of the building stock in the Matanuska Valley will utilize natural gas for space heating. The proportion of railbelt population heating with gas is 47 percent. This factor forms the basis for estimating the growth of space heating demand for natural gas in the Matanuska Valley. The resulting demand level is estimated on a per household basis for residential consumption and a per capita basis for commercial consumption. Residential natural gas consumption is approximately 200 me f per household •. Per capita commercial consumption is 55 me£. ·· Fuel oil use for space heating is generally preferred only where gas or gas-fired electricity is not available. Growth in its use will depend upon the location of new structures in the railbelt. We assume that the proportion of households using fuel· oil ·for space heat de.clines slightly from the current share of 24 percent to 22.4 percent in 1999. Per household residential and per capita commercial fuel oil consumption are based on gas consumption figures converted to fuel oil on the basis of BTU equivalency. Nonrailbelt Ou-tside the railbelt, space heating is almost entirely provided by fuel oil, with the exception of Barrow. Fuel oil consumption is calculated using the share of households with fuel oil space heat and the same per capita coeffi- 1 rncludes water heating, cooking, and other minor uses. -55- c ient of fuel oil use for space heating as applied to the railbelt popula- tion. This estimate is consistent with surveys and small region studies of fuel oil use in rural Alaska. This estimate entails compensating errors. On the one band, the heating degree days are greater in most parts of the state which rely on fuel oil relativ.e to Anchorage. On the other hand, the stock of structures is smaller outside Anchorage. For natural gas consumption in Barrow, a growth rate which exceeds population growth by 2 percent is applied to a base of current consumption. Industrial Use of. Liquid Fuels·· and Natural Gas Industrial consumption is not a function of population, but rather of the availability of supplies and market opportunities. Since the major industrial users of petroleum fuels are small in number, they are best projected on a case-by-case basis. Ammonia Urea Production Ammonia Urea production using natural gas is assumed to continue at a constant level. Petroleum Production-Related Use a. Gas Use in Production Natural gas is utilized in petroleum production in Cook Inlet and on the North Slope for a variety of purposes, including space.heating, electricity genera- tion, pump fuel, etc. The level of consumption is .difficult to project because of its.many uses but is primarily dependent upon petroleum production levels and petroleum employment levels. We assume the level remains constant in Cook Inlet. On the North Slope it grows 7 percent annually for seven years and is constant thereafter. b. Oil Use in Production A small quantity of fuel oil is used in oil production. This is included in the miscellaneous industrial category •.. c. Gas Use in Transportation Included in gas use in production. d. Oil Use in Transportation Fuel oil fuels the pumps for most of the Alyeska pipeline. Annual consumption is estimated to be two million barrels of oil. This level is projected to remain constant. -56- Oil--Miscellaneous Some fuel oil is used in electricity generation for industrial self-supplied power. 'l'bis amount, taken from Alaska Power Administration, is projected to remain constant. Military The military uses natural gas for electricity generation and space heating in the Anchorage area and fuel oil elsewhere. Military transportation use of fuel oil is counted in the transportation sector. Milita%Y natural gas use is projected to remain constant. Lack of data prevents the calculation of military fuel oil consumption for space heating. Injection Gas is injected into petroleum reservoirs to enhance oil recovery. Because this is only a temporary use of gas, it is not counted a part of final con- sumption. LBG Liquefied Natural Gas (LNG) is defined as export of gas for the purposes of this report • -57- I \JI 00 I REFINERY NIKISKI Chevron Ref 1 na-y Tesoro feflnery UnIon Chemical INTERIOR ALASKA NortH Pole feflnery R.ANT CN'ACITY 18,000 BPD 45,500 BPD; Crude Unit to 80,000 BPD In 1985 for North Slope Crude. Hydroaacker to 9000 BPD. 14.5 TPD SuI fur Plant. Ammonia 1,100,000 tons/yr Urea 1,000,000 tonslyr 46,600 BPD; 90,000 Phllllps-Maraihon 230,000 r.£F/Day LNG Pac:l f I c AI ask a LJ.G 200,000 MCF/Day I nltlal 400,000 ~F/Day (2nd yr). DATE R.ANT IN (PERATION 1962 1969 07,500 BPO) 1969 1977 1969 PI anned 1989 APPENDIX C SfATE fF ALASKA !'£FINERIES 1983 DATE EXPANSIONS 1983 Asphalt capacity Increased from 280,000 to 400,000 BPY 1974,1975,1977,1980 Hydroaacker 7500 BPD, Reformer <to 10,000 BPD from 6000 BPD). 1977 Fall 1980; Napiha R.ANT PRODI.CT JP4, JA50, Furnace 011, Diesel s,Fuel Oil, Asphalt,· Unfinished Gasoline. Propane, Un I eeded, fegu I or, and Premium Gasoline, Jet A, Diesel Fuel, No. 2 Diesel, JP 4 and No. 6 Fuel 011. Anhydrous Ammon I a, Urea Prill s and Granules. Mllltcr-y Jet Fuel (JP4>, 300()..4000 BPD; Commercial Jet Fuel, 500o-6500 BPD; Diesel/Heating Fuel No. 2, IBOo-2500 BPD, Diesel Fuel Type No. 4, 60()..1800 BPD. TRANSFORTAT ION FACILITIES Llqulfled Natural Gas. Llqulfled ~tural Gas. DESTINATION JP4, JA50, Furnace 011, Diesels and Asphalt for Alaska; Unfinished Gasoline, HIgh Su lfurFue I s to Lower-48 states. AI ask a except No. 6 Fue I Oil to Lower-48 states. West Coast and export by tankerand bulk freighter. Fa lrbanks area, Nenane and river viii ages, Elison AfB, Anchorage area. Japan, by tanker, 2 tenkers capacity 71,500 cu.m. each, avg'. one ship every IOdays. Southern Cal I fornl a, one ship every 13 days, fnltlal phase. ECONOMIC GR.OWfH ASSUMPTIONS APPENDIX D Economic projections for estimating future petroleum demands are complicated this year because of the unsettled nature of the world oil market and the recent, rapid growth of the Alaska economy. The former makes it difficult to project acthdty in the petroleum industry, the most important basic sector industry in the economy, and activity generated by state government spending, which is primarily a function of the availability of petroleum revenues. The latter makes the task of relating recent growth to longer-term trends dif- ficult. The econ.omic growth during the last 4 years, fueled by the dramatic growth in state spending resulting from the increase in oil prices, has generated an increase in population from 420 thousand in 1980 (July l, 1980) to an esti- mated 52 7 thousand in 1984. This increase in population greatly exceeds the magnitude of the growth which occurred between 1974 and 1976 during the peak construction years for the oil pipeline (approximately 67 thousand) and was unanticipated by all forecasts. The annual growth rate of 5.8 percent since 1980 is double the average annual growth rate of 2.9 percent in population between 1960 and 1980. The fact that this population change has been much more rapid than the increase in employment opportunities demonstrates the dif- ficulty in accurately projecting longer-range population trends for Alaska, particularly within the context of a temporary boom generated by state spending. The base case economic projection used in this analysis contains a population growth rate of 1.4 percent annually and an employment growth rate of 1.3 percent. These growth rates are less than those observed over the first two decades of statehood, but are considerably above projections of growth of the national economy. For example, the U.S. Department of Commerce has recently projected population growth for the nation to the year 2000 at .8 percentage annually and employment growth at 1.2 percent annually.l State population grows from 527 thousand in 1984 to 652 thousand in 1999. Nonagricultural wage and salary employment grows from 222 thousand in 1984 to 285 thousand in 1999.2 This growth is consistent with many possible sets of assumptions about future basic sector activity and public sector spending as well as support sector and demographic responses. Future basic sector economic activity underlying this projection is similar to that used in the Revised Reference Case scenario used in the Susitna Studies Program.3 lsurvey of Current Business, November 1980. 2This projection is identified as UP85.16. 3oacumented in full in ISER MAP Economic Model: State Model Documenta-tion Version A85.1: December 1984. -59- '!be regional distribution of economic activity, employment, and population continues the historical trend of shifting gradually toward the railbelt as the economic center of the state. -60- CONVERSIOB FACTORS Conversion F.actors 1 gallon diesel 1 gallon gasoline 1 gallon jet fuel 1 gallon crude oil 1 MCF natural gas 1 barre 1 diese 1 1 barrel gasoline 1 barrel jet fuel ~ 0.0239 barrel .crude oil equivalent "' 0.0215 barrel crude oil equivalent • 0.023 barrel crude oil equivalent :z 0.1387 million BTU = 1.000 million BTU a 5.825 million sru "' 5.248 million BTU = 5.604 million sru -61- APPENDIX E ALASKA CRUDE OIL ASSAYS [1] APPENDIX F SADLEROCHIT KUPAAUIC MEST SAK£21 CRUDE 23,0 &ravity, IAPI 26.4 22.4 SUlfur •t % 1.06 1.76 1.82 Pour pti IF. 0 -55 -50 Rvp, ps 3.55 2.6 2.70 Kin. vis. 1601 F. 42.42 tSt: 79.98 95.92 H25 lb/1 000 bbl 0.35 (5 Sail, lb/l 1ooo bbl 32.7 Carbon rn due~ It % 4.40 7.37 7.62 Neut. no. (097 J 1.12 0.68 Nl/V 1 pp1 11/26 19157 22/61 Nitro1en pp1 2090 1980 -- C4 ' ig~ter, yield, val % 1.17 0.63 cs • lizhter, yield 9 val 1 2.12 LIGHT &AS LINE Ran,e, IF C5-150 nPBJ, C5-150 CS-150 Yit d, val 'l 2.2 1.6 1.9 Sulfur, •t % (0.001 0.006 0.004 ROI dear 71.5 lftHI dear 69.8 RON + O.Sg TEL/gal 78.4 NAPHTHA Ran~e. IF, 15Q-380 15G-380 150-380 Yie dr YDl % 15.6 14.5 14.4 Sulfur, .t % 0.013 0.018 0.018 Paraff1ns, val % 39.7 38.3 36.4 Napthenes, val % 43.3 47.0 48.2 Aratatics, val % 17.0 14.7 15.4 DISTillATE Ran,e, IF. 38Q-650 380-650 380-650 Yie II val % 28.6 26.9 27.5 &ravily, IAPI 33.1 31.6 Sulfur{ •t % 0.414 0.66 .700 Pour p IF -25 -25 -35 Cehne ha. 45.8 45.4 42.1 Total 112, p~1 79 Vis. eSt I 100~ F. 3.083 3.34 Aratatics, val % 33.6 30.0 31.4 BLENDED &AS OIL &AS OIL &AS OIL Ran,e, IF. 650-840 65G-840 650-840 Vie d vo1 1 16.4 18.9 16.6 &ravily, IAPI 23.8 20.5 21.1 Sulfur, •t % 1.10 1. 79 1.81 Aniline p4 IC 74.7 104.3 Pour ~t, 70 50 60 Kin. is. !lOOt F. 34.20 43.99 Carbon residue, I 0.012 lit 1: .01 Total nitrogen, pp1 950 600 840 Basic nitrogen 0.03 . lit 1: .02 0.023 V/Nit PPI (1 RESIDU Ran1e, tf. 650+ 650+ 650+ Yie d val % 52.4 56.0 55.6 6ravily, tAPI 15.0 11.7 10.8 Sulfur, .t % 1.63 2.59 2.53 Carbon residue, l 8.82 •t x: 12.61 lit 1: 13.15 Total nitrogen, pp1 3600 Pour pt, iF, 80 40 45 Kin. vis. ! 210 IF, 47.54 97.15 135.3 Kin. vis. ! 275 IF, 15.55 Pentane insoluble, •t Z 14.97 £11 Aalund, L.R., •&uide ta Export Crudes for the '80s,• Oil and &as Journal, Dec. 19, 1983. [21 Crude not in production{ but pilot progra• is under•ay in K~parut area to deter1ine feasibility. Assay satple obtained during drill s e1 test. SID Tables: CRUDE, rev 11/22/84 -62- DEFINITIONS Or STATU'l'OB.Y TERMS APPENDIX G AS 38.05.183 states that oil and gas taken in kind as the state's royalty share of production may not be sold or otherwise disposed of for export from the state until the CO~~missioner of Natural Resources determines that the royalty~in-kind oil or gas is surplus to tbe present and projected intrastate domestic and industrial needs for. oil and gas. The statute contains several key terms whose meaning must be resolved before an estimate can be made of oil and gas surplus to the state's needs. Tbeae key terms are: 1) "oil and gas.'' 2) "export, 11 3) "present," 4) "projected," 5) "domestic," 6) ''industrial," 7) ''intrastate," and. 8) "bow these needs are to be met. 11 Each key term affects · tbe size of the estimated demand for oi 1 and gas in Alaska and consequently, the size of the projected surplus or deficit. The meaning of each term is discussed below. oil and Gas Crude oil and natural gas are fluids containing hydrocarbon compounds produced from naturally occurring petroleum deposits. ]ypical etude oil contains several hundred chemical compounds. The lightest of these are gases at normal temperatures and pressure, described as ''natural gas.•• These light fractions of the crude oil ~tream include both hydrocarbon and non-hydrocarbon gases, such as water, carbon dioxide, hydrogen sulfide, helium, or nitrogen. . 'lbe principal hydrocarbons are methane (CH4), ethane (C2H6), propane (C3H8), butanes (C4Hl0), and pentanes (CSH12). The gaseous component found most often and in largest volumes is, typically, methane. Heavier fractions of the crude stream are usually liquids. If a given hydrocarbon fraction is gaseous at reservoir temperatures and pressures, but is recoverable by condenaation (cooling and pressure reduction), absorption, or other means, it ia classified by tbe . American Gas Al;sociation (AGA) as a naturd gas liquid (NGL) .1 Natural gas liquids include ethane if ethane is recovered from the gas stream as a liquid. A related term is liquefied petroleum gas (LPG), composed of hydroca-rbons which liquefy under moderate pressure under normal temperatures. LPG. usualiy refers to propane and butane. A second related term is condensate, . which refers to LPG plus heavier NGL component (natural gasoline). 'lbe lightest hydrocarbon fraction is methane, which is almost never recovered as a liquid, and which makes up the bulk of pipeline gas. If a natural gas stream contains few hydrocarbons which are commercially recoverable as liquids, it is considered "dry gas" or "lean gaa." The distinction between ''wet" and "dry" is usually a legal one, which varies from. state to state. "Crude oil" usually means the non-gaseous portion of the crude oil stream •.. !Definitions vaEJ with processes. -63- Na.tural gas may occur in reservoirs which are predominately gas-bearing or in reservoirs in which the gas is in contact with petroleum liquids. Ron-associated gas is natural gas from a reservoir where the gas is neither. in contact with nor dissolved in crude oil. Associated gas occurs in contact with crude oil, but is not dissolved in it. A gas cap on a crude oil reservoir is a typical example of associated gas. Dissolved gas is dissolved in petroleUm liquids and is produced along with them. Dissolved and associated gases are usually good sources of NGL while non-associated gases are often "dry." · · The distinction b.etween 1\atural gas and its NGL components is important to a study of the ·supply and demand of r.oyalty oil and gas because natural gas liquids have a multitud.e of uses when separated from the gas stream. For example, propane is both produced in Alaska and sold in Alaska as bottled gas for residential, commercial, and limited transportation uaes, while butane is used for blending in gasoline and military jet fuel and as a refinery fuel. In addition,· Marathon Oil uses LPG to enrich crude oil at its Trading Bay facilit~. It ships the combined fluids to the Drift River terminal for export. Potential uses for NGL also include the enriching ("spiking") of pipeline gas and crop drying. The Dow-Shell Petrochemical Group and Exxon have .also recently studied the feasibility of utilizing the NGL contained in Prudhoe Bay natural gas as .the basis for an Alaska petrochemicals indus tty. Since the State has the option of considering NGL separately from the gas stream, two definitions of natural gas consumption and reserves are possible. One of these would consider natural . gas liquids as part of the gas stream. The second definition would treat the markets for LPG and ethane separately from those for gas. 'l'his requires a separate estimate of LPG consumption and gas liquids reserves. In this report, demand for LPG and ethane is estimated separately from that for gas; however, no separat·e· estimate is made of gas liquids reserves. Export Taken in context, this term appears to mean the direct physical sending of oil and gas out of the state. l:bwever, when one considers the fact that much of Alaska's industrial use of oil and gas is p;rocessed directly for export markets, the meaning of export versus 11intrastate11 is not so obvious. For example,· it appears· that processing of gas into another product, e.g., anhydrous 81JIDOnia, would probably be an "industrial" use rather than 11export 11 of gas, even thougb the ammonia is mostly exported. Liquefication to change the phase of ·the gas is a less obvious case. The liquefication of natural gas will be considered a transportation process in thl.s report. . Still more · troublesome is the use of gas and oil for transportation related to export-.- 2 Kramer, L., Williams, B., Erickson, G., In-State Use Study for Propane and Butane. Prepared for the Alaska Department of Natural Resources. Kramer Associates, Juneau, October 1981. -64- Is the gas and oil consumed in TAPS pipeline pump stations, for example, an "industrial11 use in state? Or is it really "export" of that energy, since it is consumed in the exporting process? 'l'bere is no reason why the State may not be approached in the future to co111111it royalty oil and gas to quasi-export uses •. Indeed, a top dollar o.ffer was made by the ALPETCO (later, Alaska Oil Company) for royalty oil ultimately destined (as petrochemical products) for out-of-state markets. Though the offer was made, payments in full were not· made. Also, the state once committed royalty gas to the El Paso gas pipeline proposal for expo~ of Prudhoe Bay gas,· which involved liquefication. Neither proposal was clearly for in-state industrial use. In this report, industrial demand is treated with multiple definitions as outlined later in the chapter to show how different definitions of "export" affect the estimate of total consumption in Alaska. · Present 'l'be problem. here is that the term "present" may mean "latest year11 consumption, "average recent year" consumption, "weather-adjusted" consumption, or 1'worst case" consumptiCin. In the residential and commercial sector particularly, each definition gives a somewhat different answer because of the variability of weather. 'l'be 1'worst case" consumption calculation can result in considerably highe.r gas consumption than the most recent year, if the most recent year happens to have been a relatively warm one. While it is not correct forecasting procedure to make long run forecast of intrastate residential consumption of natural gas which assume worst ease forecasts for every year, it may be prudent in praetic:e to reseeye part of · the t~e State 1 s gas and oil supply for bad weather. For forecasting, variability of weather makes the picking of a starting value for consumption somewhat tricky. In this report, Rail Belt consumption is based on average weather years. For the remainder of the state, trended per capita consumption is used, which approximates average weather conditions. Projected This is a very difficult concept, since many different projections of consumption would be possible even if it were possible to agree on a single concept defining consumption. Rates of economic development, population growth, and relative energy . prices are key features of . any consumption forecast, but assumptions concerning any of these variables are necessarily controversial. 'Ibis report describes a range of possible consumption figures under precisely articulated definitions· of consumption and varying paces of ec_onomic, __ population_1 ___ and fuel price growth. The economic and population forecasts used in this report were done by the University· of Alaska; Institute of Social and Economic Besearch in December,-1984. The assumptions used to run their economic .model are shown in Appendix i>. -65- Domestic Domestic consumption appears to mean Alaska residential consumption. As we saw above under the subheading "present", it is not at all obvious which definition of domestic consumption is the most appropriate, ·even when the identity of the custome.r is not in dispute. Some multifamily residential us.e may be described as 11commercial", obscuring the definition of the customer and causing forecasting problems for natural gas. The definition of "domestic" considered in this report includes multifamily residential in 11 residentialu or "domestic" use. Industrial As described above; "industrial" energy use has a number of potential definitions. Since one intent of giving in-state industrial needs priority over export uses of royalty oil and gas seems to be encourage in-state economic activity, 3 a day-to-day working definition of this industrial priority is that the royalty reserves be committed to the market which has the largest potential economic impact in Alaska. For forecasting purposes, however, it is difficult to say which markets will prove to be of the most economic benefit to the state. As a compromise, we will adopt four ·alternative d~finitions of "industrial" in this study. The four alternative definitions of industrial use of oil and gas used in this report are outlined below, beginning with the most restrictive and moving to the most liberal. Definition 1: Industrial use consists of any consumption of natural gas, petroleum, or their products in combustion (except that required to export oil or gas); or the chemical transformation of natural gas, petroleum, or their products into refined products for local markets. This definition explicitly excludes the exported products from refineries, as well as uses which merely change the physical form of the product (gas conditioning or liquefaction) for export, or which move the product to an export market (pipeline fuel, fuel used on lease, shrinkage, injection, vented and flared gas) • Definition 2: Industrial use consists of ;any consumption of natural gas, petroleum, or their products in combustion (except in oil and gas production and transportation); or the chemical transformation of natural. gas, petroleum, or their products into refined products. This definition counts feedstocks for petrochemical plants and refineries as industrial 3See however, the short discussion of legislative intent beginning on page 9 of Kramer, Williams and Erickson, op. cit. That study raises many of the issues regarding surplus gas and oil discussed in this report • . -66- consumption. It also counts energy consumed by an LNG facility as industrial consumption. It excludes the feedstocks of LNG plants ;and fuel consumption by conditioning plants, pump stations, fuel used on lease,· shrinkage, injection and flared gas. Definition 3: Industrial use consists of any consumption of natural gas, crude . oil, or their products in combustion (except in oil and gas transport and. extraction) or their chemical transformation into refined products. ntis definition permits the feedstocks of refineries to be counted as industrial consumption. It excludes fuels used in ·pump stations, in conditioning plants, fuel used on lease, and gas shrinkage, injection, or venting. Definition 4: Industrial use consists of any use of natural gas, crude oil, or their products in combustion, ·or their transformation ·into chemically different products. This definition permits feedstocks of refineries to be counted as industrial consumption, as well as energy consumption in conditioning plants and pump station.s. It excludes injected gas, which is ultimately recoverable for other uses, and LNG processing, which is considered an export. Definition of 4 will be used for the purposes of this report. None of the four definitions treat.s industrial use (including transportation) to include gas injected to enhance oil recovery, since in theory this gas remains part of the ultimately recoverable gas reserves of the state. 'Thus, is no.t "consumed." Intrastate It is unclear what is meant by intrastate consumption. Some uses, such as combustion of o11 and gas products in fixed capital facilities in Alaska, are reasonably easy to categorize as intrastate. 'There are several uses in transportation which are not obviously within Alaska. These categories include the fuel burned in marine vessels such as cargo vessels, ferries, and fishing boats, and fuel burned in international interstate air travel. There are multiple ways to approach the definition of this consumption. The first is a sa.les definition: the fuel use in transportation which is s~ld in Alaska. the second approach is to base consumption on fuel used in Alaska or related to Alaska's economy and population, regardless of the point of sale. This results in three logical definitions, described below: Definition 1: Intrastate consumption in transportation includes all sales of fuels to motor vehicles, airplanes, and vessels in Alaska, including bonded_ fuels. It excludes fuel consumed by motor vessels which was purchased in other "states, ·and fuel consumed by a·irlines ·between Alaska locations unless the fuel was sold in Alaska. It also excludes out of state military fuel purchases. ~7- Definition 2: Intrastate consumption includes fuel consumed by motor vess~ls, airlines, and vehicles engaged in Alaskan economic activity. It includes use of fuel by American fishing boats in Alaskan waters regardless of where the fuel was purchased, use of fuel purchased in Washington State by Alaska State ferries, and fuel consumed by ships and aircraft involved in Alaska trade. . It excludes sales to aircraft on international flights (bonded and unbonded), but includes militaty out of state purchases. Definition 3: The final definition is a compromi~e between the first two. It includes all fuel purchased within the state, plus military uses, but excludes fuel purchased out of state except for military uses. The basic definition in this report is the third definition. By excluding bonded and exempt jet fuel, the report also approximates Definition 2. Lack of data on out-state purchases by the military makes Definition 1 impractical. How These Needs Are To Be Met Any analysis of how the ·oil and gas needs of intrastate domestic and industrial sector are to be met could include several sources of supply: s_tate royalty oil and gas, in-state oil and gas reserves under other ownership, probable extensions of proven reserves, and imports of crude oil, petroleum products, and (in theory) natu:r;al gas. -68- ACKNOWLEDGMENTS '!his docume~t was prepared by the staff of the Division of Oil and Gas: 0194P Kay Brown, Director Pam Rogers, Leasing Manager Bill Van Dyke, Petroleum Manager Ed Phillips, Petroleum Economist Dick Beasley, Geologist Wayfte Hanson, Cartographer Andi Crippen, Clerk/TYpist Scott Goldsmith, Associate Professor of Economics, Institute of Social and Economic Research, thiversity of Alaska, Anchorage Phil Rowe, Research Associate, Institute of Social and Economic Research, university of Alaska, Anchorage -:-69-